ACCA SBL Syllabus C. Strategy - Scenario Planning - Notes ^{5 / 5}

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