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Syllabus C. Strategy C2. Environmental Issues

C2e. Scenario Planning

Scenario Planning

The Use of Scenarios

After identifying the different factors and drivers, they can be usefully built into scenarios

Scenario Planning

Particularly useful when preparing a long term view (minimum 5 years) with:

  • Few Key influences

  • High uncertainty surrounding them

    eg Oil Industry (raw material availability, price and demand)

  • This will result in a limited number of logically consistent, but different scenarios to be compared

Benefits

  • Sensitivity analysis of different strategies (what happens if…)

    Challenges the status quo - promoting more innovative approaches

How are scenarios prepared?

  1. Step 1

    Identify high impact, high uncertainty key Factors (PESTEL analysis) - keep the numbers low

  2. Step 2
     
    Identify Different Possible futures in each factor

  3. Step 3

    Build scenarios of plausible configurations