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.

Comptus does not have a contingency plan so instead they need to start taking a look at the easy and moderate steps. First they should monitor inventories closely since there will be weakness in the sales chain. Next they should reduce capital spending plans and set up credit lines if possible. The last thing to do in this stage is look at their manufacturers and decide which ones are most important. This will be important if things get worse because they will already understand which ones to lay off and which ones to keep. Now that the easy steps are taken care of they need to enter the moderate stages. They need to review management and think about lay offs, look at capital spending, and financing. Lastly it is very important to keep lenders fully apprised of conditions. If it is necessary they should look at assets and think about selling and assets that they don’t truly need to survive as a company. The last steps are the survival steps where Comptus needs to do anything to stay afloat. This is where they layoff any employees that aren’t fully necessary. Selling off assets as needed and avoid bankruptcy at all costs.

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.