Question1:How useful scenarios are currently in developing strategy. What is Scenario planning? Its advantage and disadvantageScenario planning is a marketing and strategic tool used by marketers to plan their business strategies. Lynch defined scenario as detailed and plausible ways of how a business environment of a given organization can focus on its future developments by categorizing the crucial environmental influences and factors of change, particularly in situations of high level uncertainties. Scenario not only involves forecasting, but also re-examining the possible future environment factors, structure as well as variable influences. This implies that scenario planning does not forecast on unpredictable future environment of a business, but focuses more on the multiple and plausible futures.
Based on this definition, it can be noted that a scenario planning involves creating possible representations of potential future development for a firm. It is more concerned with making assumptions on the forces driving a market, including different uncertainties. Building scenario for strategic management involves two main approaches which include developing scenarios from the configuration of factors. This is accomplished through three steps, identifying the high-impact and uncertainty factors within the environment, discovering the various possible futures based on factors and developing scenarios of the plausible associations of factors.
The second approach of building scenarios is thematic scenario. When it comes to decision-making, organizations are required to focus on the highly possible options and other factors such as capital investment. Such considerations are important because scenarios may cause different effects on diverse stakeholders of industrials. Since organizations are faced with diversified business environment, such organizations need to be well-prepared to cope with the different environmental changes. For example, marketers are required to forecast future plausible changes within their business environment.
In such cases, marketers adopt scenarios as the most appropriate approach since they can be monitored and evaluated over time regarding the performance of a business unit. Through seeing possible future scenarios, organizations can develop effective business strategies. Scenario planning is advantageous because they enhance decision-making process to make complete consideration of performance outcomes as well as their implications. Scenario planning is considered the basic step strategic planning. This implies that strategic planning only becomes successful if scenarios are properly factored into the plans of the organization.
In order to achieve this, careful observation and monitoring is crucial for understanding the changes and the associated complexities within the business environment. Incases where the business environment is faced with a high level uncertainty that is complex in its occurrence, it becomes important for management to develop a single scrutiny of how the environmental influences may affect the strategy of the organization. Thus, scenario planning becomes a distinct approach to be used so as to understand the possible future outcomes from the environment. According to Mason and Herman building scenarios has largely been considered a noticeable looking process purposely designed to increase the awareness of potential changes within the external environment.
Through casting strategies as scenarios, therefore, organizations can achieve many benefits related to traditional scenario planning. As a result, organizations accelerate their strategic decision-making process particularly within the high changing environments. Scenarios are helpful in the selection of the future strategies, and thus reveal uncertainties encouraging lateral thinking as well as initiating a more learning process in the organization. Scenario planning is considered as part of the overall planning process.