From CEOpedia | Management online
Stages of preparation
Process of development of simulation scenarios consists of 7 stages:
- Specify environmental factors affecting the company and their intensity (expressed using units of measurement, and places of occurrence).
- Specify the descriptors of certain factors for the evaluation of main problem.
- Determination of the likelihood of the occurrence of descriptors from the previous stage.
- In this step model are checked through the calculation of a matrix of likelihood values.
- Scenarios are developed together with their descriptive part based on the model created in previous stage.
- At this stage it is possible to obtain variants of scenarios based on critical cases (scenarios with small probability, but serious consequences for the company).
- Summary of earlier stages is prepared, and managers make decision to choose the optimal strategy, which has slightest threat and gives a good chance of success.
- Postma, T. J., & Liebl, F. (2005). How to improve scenario analysis as a strategic management tool?. Technological Forecasting and Social Change, 72(2), 161-173.