1 / 11

Using Scenarios

Using Scenarios. Important in the crisis…. Scenarios : views of the future. Different views of the future environment plausible states of the future defined on key environmental factors about which there is a high level of uncertainty Uses: to think about uncertainty

nolak
Download Presentation

Using Scenarios

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Using Scenarios Important in the crisis…

  2. Scenarios: views of the future • Differentviews of the future environment • plausiblestates of the future • defined on key environmental factorsabout which there is a high level of uncertainty • Uses: • to think about uncertainty • to check if strategies are acceptable under different evolutions of business environment • to check the robustness of strategic decisions e.g. investments

  3. Typical Scenarios • In the past, usually three: • Business as usual (existing trends) • An optimistic (e.g. rosy skies) • Pessimistic (e.g. world of contradictions, growth restraint) • Today at least two: • continuation of trends • pessimistic, worsening conditions, late recovery • Contingent scenarios also for important events • E.g. emergency situations, catastrophic evens

  4. Naming Scenarios • Attractive “names” can have communication value • Ostrich scenario • Lame Duck scenario • Icarus scenario • Flamingos scenario (Van der Heijden (1996), The Art of Strategic Conversation, J. Wiley) • Set the ‘tone’ of each scenario • e.g. Shell’s ‘new frontiers’ (‘formerly ‘the sustainable world) and ‘barricades’, or BA’s ‘wild gardens’ and ‘new structures’.

  5. Building scenarios • Step 1: • Select key environmental factors • Select those with high impact and high uncertainty • Step 2: • Combine factors as to produces plausible future pictures of the world • Form two or more pictures to show the range of changes • Step 3: • Assess impact under each scenario, to the sector and the firm • Use scenarios in strategy process and decision taking

  6. Identifying high impact, high uncertainty factors High A B C D Potential Impact Low High Low Uncertainty What do we mean by uncertainty? Step 1

  7. Scenario planning: Step 1 • From the PEST, 5 forces analysis , competitor analysis identify high uncertainty / high impact factors • Examine possible range of change and impact • Consider the interconnectedness of the factors and the driving forces which influence these factors. Step 1

  8. Scenarios – e.g. range of change / impact

  9. Scenario planning: Step 2 • Build 2 or 3 scenarios, plausible outcomes, based on different configurations of the selected factors • The same factors in each scenario • To express plausible states, not impossible to occur • What pictures of the future each scenario gives? • Set the ‘tone’ of the scenarios e.g. optimistic, pessimistic future or dominant themes • Flesh out the story behind the scenario Step 2

  10. Scenario planning: Step 3 • Examine the implications of each scenario • for the sector and for the firm • Use the scenarios in strategy making and taking important decisions • Strategy: • How strategy stands under each scenario. • Can the strategy stand even under the worse scenario? • Would other alternative strategies stand better? • Decisions: • How robust are the decisions? • Can e.g. an investment stand under the worse scenario? Step 3

  11. Using Scenarios: main points • Build scenarios on external factors, not on company decisions • Evaluate the range for possible outcomes, the “risk” involved • Assess possible outcomes under each scenario • Implications for the sector and the firm • Evaluate how robust a given strategy is • Does it stand even under the worst scenario? • Revise strategy with a view of risks involved

More Related