7-5 Milestone Five : Assumption and Contingency Planning Assignment- Starbucks Alcoholic Drink / Adult Beverages

Module Five strengthens your business implementation plan through an analysis of crosscultural, economic, and geopolitical factors that may impact the business environment and concept by allowing you to explicate the assumptions behind your business implementation plan and detail your contingency plan.

Understanding the ways in which globalization factors such as the cross-cultural and geopolitical implications influence your implementation plan is critical for success. Even if your idea or concept is limited to one specific country or part of a country, various crosscultural, economic, and geopolitical elements will interact with your business implementation plan.

For instance, your business implementation plan may target potential customers in a country that is heavily dependent on the manufacturing sector. Many manufacturing industries rely on global demand for the products they manufacture. Geopolitical and global economic circumstances have the potential to dramatically affect demand for your product or service even if it is only available in one country.

Beyond this, you or others may ultimately offer the product or service in multiple countries. For these and other reasons, your plan must analyze the cross-cultural, economic, and geopolitical factors that may affect the business environment or concept. Janakova and Magdolen (2013) support this when they argue that political turmoil and many other factors lead to a situation in which organizations operate in a globally interdependent environment. Global realities will affect your business implementation plan, so it is good to outline these realities.

There are at least two perspectives from which to understand the geopolitical and global economic environments. First, you should understand the ways in which these can negatively affect your product or service. The goal is to have a clear idea of how to appropriately respond to negative events to insulate your financial stakeholders from such events. The second perspective is how these geopolitical and global economic environments can positively affect your product or service. The approach here is to have an idea of how to take advantage of opportunities that occur during changes in global political or economic environments.

Understanding cross-cultural factors means more than just determining how to operate within the context of other countries. Janakova and Magdolen (2013) state that in many business and organizational environments, leaders and others interact with people from different cultures who also have cross-cultural backgrounds to consider. Within this framework, Nardon and Steers (2014) proposed that cross-cultural leadership involves understanding how cross-cultural dynamics may differ from context to context and also identifying how to leverage cross-cultural dynamics. A comprehensive business implementation plan will consider cross-cultural, economic, and geopolitical factors that may impact the business environment and concept.

In addition to global factors, your potential financial backers also want to understand the assumptions upon which you built your business implementation plan. Here, the objective is for the potential financial backers to judge the reasonableness of your assumptions for themselves, which could be somewhat difficult because it opens up lines of inquiry that might lead to conflict. At the same time, it is important to embrace the potential conflict associated with outlining your assumptions. In the end, working through the assumptions and aligning them will strengthen the overall plan and give your project a greater probability of success.

Holllingworth (2008) indicates that when business implementation plans do not disclose the assumptions, financial backers are more likely to back the plan. The initial support, however, is much less important than a winning business implementation plan. According to Hollingworth (2008), even though financial backers are more likely to support the business implementation plan when they do not understand assumptions, such business implementation plans are also more likely to fail. When financial backers understand the assumptions, they may uncover problems in the assumptions that need to be resolved before project funding.

When considering assumptions, you must also understand what assumptions are and what they are not. Murad (2002) argued that some business leaders make assumptions that substitute for research effort. The assumptions you make for your idea or concept should only be on the things you cannot reasonably determine with some degree of certainty. Limiting your assumptions to those that fit within this framework gives you vital credibility with your potential financial backers.

Addressing the assumptions behind your business implementation plan requires engaging with each assumption in a meaningful way. Daly and Walsh (2010) argue that methodologically decomposing and reconstructing assumptions provides organizational leaders the mechanism necessary to fully understand the assumptions behind business implementation plans. Engaging with your assumptions using this kind of intellectual robustness may be difficult at first, but the effort is worthwhile. Finding difficulties with your assumptions before the plan is under way is much better than finding difficulties with the plan after the fact.

Examining your assumptions is especially critical because your idea or concept is within the framework of entrepreneurship or intrapreneurship. In these cases, the project you propose is well outside of what organizational leaders might see as the normal way of doing business. Many successful concepts or ideas come from this rethinking, so the project has a good foundation. At the same time, working outside of the normal way of doing business limits the sort of institutional knowledge and insight typical of operating within the normal organizational framework.

Because your idea or concept exists outside of an organization’s normal operational capabilities, robustly detailing the assumptions might even be what differentiates your project from other potential investments. As you may recall from earlier modules, your financial backers are likely selecting investment opportunities from a number of good ideas or concepts. Bertels, Koen, and Elsum (2015) even go so far as to argue that effectively understanding the assumptions behind a proposal might prevent a project from failing. Ensuring that you have the right assumptions in your project plan and outlining them appropriately is a critical part of your overall project proposal.

In addition to explicating your assumptions, in this module you will also detail your contingency planning. Even with a well-thought-out proposal, unexpected events or other activities can often affect implementation. The unanticipated events can be negative circumstances, or they could even be opportunities. In both cases, thinking about how to act before an unexpected event takes place is much better than being forced to react while a crisis is unfolding.

Many approaches to contingency planning consider how to avoid catastrophes should unexpected events occur. For instance, Simpkins (2009) proposes that effective contingency planning is one way great leaders avoid project disaster. While it is certainly necessary to plan for unexpected negative events, contingency planning should also include understanding what to do when unexpected positive events occur. As an example, how would you react if market demand for your idea or concept was double what you expected? Contingency planning involves thoughtfully understanding how to react in unexpected circumstances.

One of the foundational elements of contingency planning is to identify those elements of the plan that are the most critical. These are the areas on which to focus the contingency plan, because continuity in these areas is essential for overall project success. O Neill (2013) argues for a systematic approach toward identifying the critical components and systems for the project so the project planners can include these in their contingency plan. Contingency planning, when combined with a thorough analysis and understanding of the critical project elements, leads to greater project success.

Besides the benefit of a potentially more effective response to unanticipated events, robust contingency planning also demonstrates leadership. Svensson and Wood (2005) propose a link between leadership effectiveness and business practices, such as contingency planning. As mentioned before, potential financial backers often have more good proposals than available funding. As a result, the potential financial backers are likely to consider their perception of leadership effectiveness as a project selection input.

References

Bertels, H. M., Koen, P. A., & Elsum, I. (2015, March–April). Business models outside the core: Lessons learned from success and failure. Research-Technology Management. doi:10.5437/08956308X5802294

Daly, P., & Walsh, J. (2010). Drucker’s theory of the business and organisations: Challenging business assumptions. Management Decision, 48(4), 500–511. doi:10.1108/00251741011041319

Hollingworth, M. (2008, November/December). Strategic assumptions: The essential (and missing) element of your strategic plan. Ivey Business Journal. Retrieved from http://iveybusinessjournal.com/publication/strategic-assumptions-the-essential-and-missing-element-ofyour-strategic-plan/

Janakova, H., & Magdolen, L. (2013). Creative impact measure of cross-cultural managerial aspects. Creative and Knowledge Society, 3(2), 16–27. doi:10.2478/v10212-011-0035-z

Murad, D. (2002, May). Stop making assumptions: Plan proactively for any uncertainty. Adhesives Age, 47. Retrieved from http://bi.galegroup.com/essentials/article/GALE%7CA87131467?u=nhc_main

Nardon, L., & Steers, R. (2014, April–June). Managing cross-cultural encounters: Putting things in context. Organizational Dynamics, 43(2), 135–145.

O’Neill, P. (2013, August). Protecting critical infrastructure by identifying pathways of exposure to risk. Technology Innovation Management Review, 3(8), 34–40

Simpkins, R. A. (2009). How great leaders avoid disaster: The value of contingency planning. Business Strategy Series, 10(2), 104–108. doi:10.1108/17515630910942241

Svensson, G., & Wood, G. (2005). The serendipity of leadership effectiveness in management and business practices. Management Decision, 43(7), 1001–1009. doi:10.1108/00251740510609992