Asked by Christopher Severson on May 16, 2024
Verified
What is a scenario analysis? What are the basic steps involved in conducting a scenario analysis?
Scenario Analysis
A process of analyzing possible future events by considering alternative possible outcomes, helping in strategic planning and decision-making.
Basic Steps
Fundamental procedures or actions required to accomplish a task or process.
- Understand the concept and significance of scenario analysis in strategic planning.
- Describe the basic steps involved in conducting a scenario analysis.
Verified Answer
AS
Anmol Sheikh
May 19, 2024
Final Answer :
Scenario analysis is an "if ...and if ...and if ...and if ...[all at the same time],then ..." tool in which multiple forces ("drivers" of future conditions)are simultaneously combined to create rich "possible futures" or scenarios.In scenario analysis,several drivers,such as interest rates,regulations,and competitive intensity,are combined to create descriptions of complex possible "futures"which may not come true,but could.Scenario analysis can be reduced to a few basic steps:
1.Define the scope of the analysis;
2.Identify the drivers of future strategic contexts;
3.Select specific levels,changes,or events within
each driver to frame the future;
4.Combine those drivers and levels/changes/events
to develop comprehensive scenarios;
5.Select three or four scenarios for analysis;
6.Analyze and plan for each selected scenario; and
7.Integrate results to identify near- and long-term
directions,actions,and investments and
to appraise strategic alternatives.
1.Define the scope of the analysis;
2.Identify the drivers of future strategic contexts;
3.Select specific levels,changes,or events within
each driver to frame the future;
4.Combine those drivers and levels/changes/events
to develop comprehensive scenarios;
5.Select three or four scenarios for analysis;
6.Analyze and plan for each selected scenario; and
7.Integrate results to identify near- and long-term
directions,actions,and investments and
to appraise strategic alternatives.
Learning Objectives
- Understand the concept and significance of scenario analysis in strategic planning.
- Describe the basic steps involved in conducting a scenario analysis.
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