Question

What is meant by "scenario planning"? How can this method be used by managers as they formulate strategy?

Answer 1

Scenario planning refers to a tool of strategic planning helps the managers to better understand the impact and nature of forces driving its future. Scenarios are based on the insights of experienced stakeholders because it makes an attempt to express and consolidate the observations based on previous experience and future trends. Scenario planning can be helpful to managers as they formulate strategy in the following ways:

--Systems thinking: Scenario planning manager allows systems thinking and have a wide variety of "scenarios" in the next steps, thus manager are provided an insight to prevent mechanism, before problems occur. The possible scenarios based on a series of empirical and logic facts through the organisation acumen and the immediate perception, noticing the past trends in the evolution of things, impact and shape of changing structural trends.

--Risk Reduction: It helps in reducing risk as scenario planning deal with the future uncertainties by aware of the 'weak signals' and allows preparing to handle new situations in better ways.

-- The optimal allocation of resources: Scenario planning makes managers more aware of the external environment and company's status and future directions thus can match internal resources to external environment for efficient allocation of the resources.

--Understanding different cultural worldviews and respect others: A discussion on Scenario planning helps in understanding and respecting the different cultural worldviews

-- Keeps an organisation alert to change: The change often begins at the margins instead at the top; and helps management to be ready for the change.