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.

Graponne: Graponne’s contingency plan has a good overall structure, however, is missing many key points, such an an early warning system. While it is a good idea to tighten inventory and to make sure there is ample cash and available credit. This being said, while it is a good idea to keep team members engaged it maybe a good idea to start cutting down on staff.

Bank of New Hampshire: Bank of New Hampshire does a fantastic job of having a proper early warning system. Their forethought to stress test their loan portfolio as well as their balance sheet leads to them being extremely well prepared. Other than further evaluating staff there is not much more Bank of New Hampshire can do to prepaire for a recession.

Comptus: Comptus should follow these easy steps to prepare for an inevitable recession. First they should start to reevaluate capital spending. The next easy step to take is to slowing the hiring process and evaluate how “lean” your staff is. It is also important to tighten all forms of credit as well as tighten inventory. It is just as important to continue to reevaluate shifts in the market as well as overall economy as the recession progresses, this will allow you to beat your competition to the freed up market space from companies going out of business.

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.