Difficulties in Implementing Scenario Planning - Coursework Example

Running Head: Contemporary Issues of Business Your name Course name Professors’ name Date Introduction Scenario planning is an emerging trend in modern businesses, which focuses on the future with the assumption that the future will be very different from present circumstances. It is based on creating several different expected futures after carefully analyzing the possible influencing factors. Most of the methods used are based on the premise that the world will not be so much different as compared today in a given period. Scenario planning is a tool for managing risks through making assumptions about what threats and opportunities may affect an organization in future and coming up with advance plans. The scenario planning method was first used by Royal Dutch/Shell and it involved a study of globalization, liberalization, technology and their economic and political implications. The method emphasizes that organizations must pay consideration to risks and uncertainties that are likely to occur to the organization as time progresses and prepare any plans with this in mind (Raj, 2007). Scenario planning is useful to business entities as it enables them concentrate on their core businesses of making profits and cut back on what may bring about losses. The method has many approaches but all lay emphasis on the fact that there should be a series of interconnected stages beginning with the assessment of the current situation and eventual generation of case scenarios after carefully pre-testing them (Willmore, 2001). Benefits of scenario planning Scenario planning enables business managers to understand relationship patterns between seemingly unrelated patterns in a business organization. Managers are able to identify areas of utmost importance to the business and consequently prioritize on them. This may then enable them to avoid certain risks, which would have affected the business (Raj, 2007). Scenario planning enables the testing of new ideas and concepts. This is because any new ideas generated during the scenario planning are first put through a testing scenario to predict possible impacts (Willmore, 2001). The testing of new ideas is an inherent benefit in that it generates a body of knowledge, which can be applicable in future. Such knowledge acquired saves time as it can just be replicated into other contexts when a similar problem arises. This consequently enables previously established positions to be challenged and for the rectification of any noted inconsistencies. Another key benefit of scenario planning is that it equips business managers with a tool for effective response to any emerging issues in a proper and organized manner (Raj, 2007). In this case, any unexpected outcomes do not get managers unprepared. In instances of emergencies, managers just need to sift through the prepared scenarios and adopt a suitable one. This saves both time and money in that factors of production within a business entity do not halt due to unforeseen calamity. The strategy eventually stabilises financial base of a firm. Scenario planning promotes creativity since it involves thinking greatly about possible happenings in future and making recommendations on their solutions. This stimulates imagination. Scenarios provide a learning environment in which one can express his or her ideas without fear (Beerel, 2009).This further equip the management with problem solving skills. The other benefit of this is that there is mutual sharing of knowledge and ideas among management professionals from diverse fields as they make any possible suggestions on uncertainties that may occur with the passage of time. The formulation of company policies rely a great deal on scenario planning. Information and approaches used during scenario planning usually act as a strong information base for formulating company policies. Scenario planning in this case acts as a bridge between formal approaches to solving problems, which are solely reliant on quantitative techniques with informal approaches that do not entail empirical methods (Heijden, 2002, p.13). Scenario planning is a flexible approach to uncertainties that may occur to an organization. It is not as rigid as quantitative approaches that are focused on providing exact answers (Beerel 2009, p. 230). The flexible nature of scenario planning makes it easily adaptable to any setting without excessive formalities. The method also provides an opportunity for combining several aspects of a long process into one unified approach (Beerel, 2009, p. 230). Scenario planning entails the two processes of analyzing and synthesizing data presented as one complete set of out look. Through multiplicity of approaches scenario approach presents different dimensions of handling issues hence reducing the risk of appearing confrontational in proposing one approach in opposition to another. Scenario planning also acts as a communication tool for communication within an organization. The approach generates a discussion of various viewpoints both from within the organization and from the external environment (Heijden 2002, p.9). This conversation is a benefit in that various ideas from all sources are welcomed. Members of the organization are also free to voice their inputs at this point, which then stand a chance of being considered as part of the final scenario suggested. This is therefore beneficial in that it is an inclusive approach, which considers suggestions from a wider scope of people. Difficulties in implementing scenario planning Most of the suggestions that are proposed in a scenario planning process require consolidation by a team of highly trained personnel. Scenario planning therefore requires the input of experts and a big team of professionals, which is costly to an organization (Fahey, 1997, p.423). A business entity, may find it hard to commit its funds and resources to a project with long-term intangible and unquantifiable objectives. The whole concept of scenario planning requires a big investment, which most managers deem as being unproductive in the short term. Scenario planning involves changing the entire system of operations within an organization to be compatible with the use of scenarios. This is the most difficult part because it is often met with resistance which may even lead to the entire failure of scenario planning approach (Fahey, 1997, p.352).Change in any organization is usually very hard to adopt. This is because most managers find it hard to adopt new techniques, as they want to be source of all decisions so that they can appear competent with the adoption of scenario planning (Fahey, 1997, p.354). It may also be difficult to implement scenario planning when the management fails to support the programme from the start (Fahey, 1997, p.423). When the political will from the top management is lacking, it is often very difficult to implement such plans. It is therefore necessary to ensure full participation of top company executives in the development of possible scenario plans so that they also become part of the process and do not feel left out. At the onset of scenario plans, there is sometimes duplicity of roles. This is occasioned whereby there are no clearly defined roles about the specific duties to be carried out by each individual. Any abrupt adoption of scenario plans generates confusion, which may lead to a breakdown of the entire programme. This is because in most cases employees were not prepared in advance about their new roles in case of any emerging uncertainties that will necessitate the use of scenario plans (Fahey, 1997, p.423). Organizations at times generate plans without setting aside enough time to train all the affected stakeholders (Fahey, 1997, p.425). All employees in an organization that has adopted scenario planning should be made aware of the existence of such plans and trained on how to operate as per the scenario plans. Companies sometimes come up with scenario plans and fail to allocate adequate time towards employee interaction with the programmes generated. Key drivers of change and their impact in the business environment a. Technology The advent of new technology has revolutionalized the way of conducting business in most countries. There has been the use of digital media, which has affected various aspects in the business environment. There is difficulty in pinpointing exact changes that will that will take place because of technology. Nonetheless, there is bound to be change following the influence of technology, which will affect all spheres of human life (Moore, 2011). Furthermore, the impact of technology is now being felt as it has boosted some businesses while others have deteriorated and collapsed. The introduction of internet has had a profound impact on the way information moves between consumers also between businesses. The use of broadband technology has made communication to be cheap in the sense that one no longer needs to be physically present to communicate with another party. Such communication can instead be made through the internet by use of broadband technology. a customer in Britain, for example, can communicate with a seller in Australia and negotiate about a product without necessarily coming into physical contact with each other. Due to the rapid changes in the technological environment, there has been an increase in the cost of maintaining and updating new programmes. The management therefore chooses the cheapest technology, which might not meet all the requirements of the organization causing the company to producing low quality products, which might not meet market demands hence poor returns. The advent of technology has also resulted in negative consequences. Free flow of information via broadband, for example has raised serious concerns on the appropriate controls on this free flow of information. Some governments like china have been able to introduce restrictions on how their citizens access and utilize the internet (Godet, 2006). Other countries have been non-restrictive and allowed people to use internet in a free way. Other issues are related with privacy of individuals, which is sometimes exposed by the use of internet technology. There has been a fear that the internet has exposed details about individuals that makes them susceptible to cyber criminals. One way through which the threats brought about by technology can be solved is formulation of laws governing internet usage. Such laws should be international in nature and ratified by all states. The threats to privacy should also be regulated by companies dealing with consumers through keeping their customers details to be as private as possible. b. Demographics Demographics refer to the data related to consumers. This especially concerns the composition of given populations in terms of age and sex. As time ticks away, employees in an organization get older and leave the service of that firm. This creates a big gap in terms of the personnel because the older employees who leave the company are those who have matured in terms of their skills. Other countries, like the UK, find it hard to replace employees who retire because the younger generation does not often have sufficient training and expertise to fit and deliver effectively in the place of those who leave service (Moore, 2011). As populations continue aging, lifestyles of the younger generation also change. Most populations are also adopting new cultures and copying some of their aspects hence bringing about change in their old cultures. It is therefore important during scenario planning to consider that tastes and preferences of a population are going to change with time. One way of coping with this challenge is by carefully studying the current young population in terms of their likes and dislikes and then proactively coming up with what may suit them as they mature into an older generation. Future planning through scenario approach should consider these groups of employees who retire from service and make necessary adjustments to ensure that there is available work force with necessary skills at the time of their departure. Other attempts may involve establishing training programmes through which young professionals are mentored and prepared for future management roles in organizations. c. Financial markets The circulation of money and property in the financial markets is a key driver of change to be considered during scenario planning (Bishop, 2007). The markets can act as a launching pad for benefiting ordinary members of the society although they can sometimes bring about instabilities in global economies. Prices for non-renewable commodities should be regulated in the global markets to prevent negative impact on economies of countries, which do not produce the product. Recent disturbances in oil producing countries have served to highlight the fact that overdependence on these countries for oil is not a wise idea. Countries therefore need to identify other alternatives to satisfy their energy requirements. Financial threats to economies are a real problem that has started affecting even big economies that are usually considered stable. The United States as an example is currently facing one of the worst threats to its economy despite the fact that austerity measures are being put in place to curb the impact of this economic crisis. A country, which had to endure serious economic consequences due to a change in financial markets in the recent past, is Greece that faced serious problems as regards its economy undergoing a 'credit crunch.’ Companies and organizations therefore need to consider the bigger picture of global economies. Consideration should also be made on how it might affect own economies in future. This is more so important for multinational corporations whose operations cut across a wide spectrum of countries. These corporations are usually affected greatly in case of any threat to the world economies. d. Consumer preferences and lifestyles The modern consumer is well knowledgeable and knows all details about products and their availability. This has been made possible largely with the coming of internet that has increased the interconnectedness between people. The modern consumer is also aware of the local and international prices of products. This has made the consumer’s preferences to change a great deal such that, the consumer now wants the product that will offer the best value for money (Moore, 2011). People's lifestyles have changed greatly in modern times as compared to the previous past. This change is expected to continue even further as various forces such as technological advances continue being adopted. Expectations from members of society have changed. This has for example been noted with the modern trend of many single parents where such parents would have been ridiculed in the past. They have now been considered as part of the society and they play a major role in economic development (Godet, 2006). The current power of the consumer means that in future, products, which suit their tastes and preferences, should be designed for them. As consumers continue being enlightened, such changes should be expected and measures put in place to supply products and services that meet consumer’s expectations. Conclusion Scenario planning is a helpful planning tool that has been adopted by most business organizations. It is helpful in securing key future interests of a business thus preventing it from falling apart. In the modern world, where there are many unpredictable situations, scenario planning should be encouraged and put into place by businesses that want to survive the onslaught of the new technologies, demographic change, financial markets and a change in consumer preferences and lifestyles. Reference List Beerel, A., 2009. Leadership and change management. London: Sage publications. Bishop, P. Hines, A and Collins, T., 2007. The current state of scenario development: an overview of techniques. Foresight Journal, 9(1), pp. 5-25. Fahey, L., 1997. Learning from the Future: Competitive Foresight Scenarios. New York: John Wiley and Sons. Godet, M., 2006. Creating Futures: Scenario Planning as a Strategic Management Tool. 2nd edn. London: Economica-Brookings. Heijden, K., 2002. Sixth Sense: Accelerating Organizational Learning With Scenarios. New York: John Wiley and Sons. Moore, P., 2011. Five Key Drivers of Change for Nonprofits. [Online] Available at: http://www.grizzard.com/five-key-drivers-of-change-for-nonprofits/. Raj, R., 2007. Corporate Planning and Strategic Human Resource Management. Mumbai: Nirali Prakashan. Willmore, J., 2001. Scenario Planning: Creating Strategy for Uncertain Times Information Outlook [online] (updated 9 January 2001) Available at: [Accessed 23 April, 2011]. Read More