Describe the importance of scenario planning
how it works and limitations.
Scenarios are stories about the way the world might turn out tomorrow, stories that can help us recognize and adapt to changing aspects of our present environment. Scenario planning is a disciplined method for imagining possible futures that companies have applied to a great range of issues. It goes further than other plans, such as contingency planning and sensitivity analysis. These plans always focus on one variable whereas scenario concerns about various variables at the same time. Overall, scenario planning attempts to capture the richness and range of possibilities, stimulating decision makers to consider changes they would otherwise ignore. People can use it to make individual decisions but mostly it is used in corporatewide strategic level. Once it develops strategic scenarios, the executive team may simply disseminate them throughout the organization to stimulate managerial thinking. Constructing scenarios
1 identify the scope
2 identify the major stakeholders: who has interests and power 3 identify basic trends
4 identify uncertainties
It is necessary to analyse the relation between the important uncertainties. Managers could have common errors in decision making- underprediction and overprediction of change. 5 construct the initial scenario themes
Once you identify uncertainties, you have the main ingredients for scenario construction. Then categorizing positive and negative elements. 6 check for consistency and plausibility
7 develop learning scenarios:
8 identify research needs: do further research to flesh out your understanding of uncertainties and trends. 9/10 (no meaning)
Unfortunately, forecasts—which are usually constructed on the assumption that tomorrow's world will be much like today's—provide an inappropriate tool to anticipate shifts in the business environment. In fact, Forecasts may even be dangerous, as they are...
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