Scenario Planning

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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

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