SCENARIO PLANNING CONCEPT IN STRATEGIC MANAGEMENT
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SCENARIO PLANNING CONCEPT
Scenario Panning Concept
Scenario planning refers to the process of forecasting future activities. Important to note that, scenario planning consists of formulated plans that are based on the mission and the overall goals of the organisation. Again, the entire process requires the business managers to think and make ethical decisions for the long terms objectives. The fundamental purpose of this paper is to research and discuss scenario planning in strategic management of a business or an organisation. Also, the paper seeks for new developments, advancements, and application of the concept in strategic management. Vivid discussions are presented in the content below.
Scenario planning is an essential part of strategic management since it makes the managers plan for the future. Generally, the concept is crucial in an organisation because it helps to deal with uncertainty in the following ways. Firstly, the idea helps the managers to understand the environment as they become rational to risk-taking and also avoid them from taking unreasonable risks (Porter, 1996). Secondly, the concept helps the managers to become more adaptive in their organisations. The Management team expand their mental models hence take proactive actions. Also, the idea avoids denial and paralysis through providing a framework to outline limited strategic choices in the organisation, thus helping the managers to make rational decisions as they get out of the existing mental models.
The concept of scenario planning within the Strategic management fits in the optimisation of effort in the organisation. Notably, considering the available resources in the organisation, the management plans of what they want to achieve in the future. Therefore, the existing gap provides a room for decision making inspiring what the organisation needs to accomplish at a given time. Finally, the concept helps the management team of an organisation to set the mission based on the goals intending to achieve. The idea, as stated, is useful in scheduling the plans that are crucial in organisation advancement.
Clarification of Meaning and Origin of the Concept
Scenario planning is also defined as a process and an ongoing approach in organisational development by setting future objectives based on the current resources. The management team of an organisation has the mandate to schedule plans that lead to corporate growth in terms of market penetration as it tries to accomplish its specified mission. The overall process starts by considering the available resources that might have an impact on the world, for example, technology, social, and environmental change. Therefore, the concept seeks for the most critical factors and uncertainties hence exploring their implications as they combine them in distinct plausible ways to create possible future.
Mentioning on the origin of the scenario planning based on the recent articles I have read, it is clear that the source of the concept was used in World War 2 (Cork & Kate, 2007, p.4). The idea was primarily used in analysing the prediction regarding their enemies and make ethical decisions. Later on, the idea was then moved to a business-related organisation in the 1960s, especially in Royal Dutch Shell. The shell’s ability to react to the Arab oil embargo in the 1970s is one of the most exceptional examples of implementing scenario planning in strategic management in business organisation to anticipate significant future challenges. Importantly, the concept assisted the company in dealing and countering its challenges. Since then, the idea is practised in most of the business organisation, helping them to expand as well as developing their potential objectives in both short and long terms. The concept needs diversified and skilled people to implement, whereby in most companies and organisations, managers are encouraged to hold and develop skills in scenario thinking.
Recent Developments in Academic Thought Related to Scenario Planning
The concept has undergone developments in academic thought since the 1980s as it has been seeking for personnel to break the constraints of everyday thinking. The development of scenario planning is illustrated in the following figure.
According to the figure above, different possible futures are identified based on the available resources in the organisation. The overall available resources determine the direction and the speed of movement in terms of development and advancement. Ideally, most of the required resources are in terms of technology-based that affects the entire environment. Secondly, the management team has the mandate to formulate the plan to deal with the specified futures following the available resources. Prominent to memo that, the plans are essential in the organisation since they determine both the short and long term objectives. For instance, an institutional organisation might focus on producing quality service in terms acceptance in the society therefore, this form the basis of the mission of the organisation. In this case, the managers should focus on formulating ideas to meet the plans.
At this juncture, the management accounts for the particular plan to invest that will have an immediate impact on the organisation. For instance, the idea was to install an internet connection for smooth running of the activities, and then they have to invest in the project to facilitate improvement in the institution. Once the management is done with the most basic plan, they can hedge to another scenario plan depending on the urgency. The projects are completed depending on their importance in the organisation such that, the most important ideas are firstly completed. If the entire scenario is invalid or fails to work well, then the management switch to another scenario planning that can have an impact on meeting the overall goals of the organisation. According to the discussed presented above elaborating the figure on the development of scenario planning in academic thought, it is vividly portrayed that following the exact steps lead the progression of the organisation.
In conclusion, based on the ideas in the discussion presented in the above context, it is clear that scenario planning is the most critical concept in strategic management in an organisation. Also, it is crucial to figure out that, to formulate the plans and objectives of an organisation it is, therefore, the role of the managers to conduct ethical scenario planning. Again, the discussion presents the origin of the concept and its formulation developments until it brings an impact on organisations. Finally, throughout the paper, it is depicted that scenario planning of an organisation is based on the existing resources that when advanced, they develop the entire organisation.
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EcoInsights, E., 2007. ScenarioPlanning for SustainableLanduse in the Namoi Catchment.
Porter, M.E., 1996. What is strategy. Published November..