Scenarios of states in environment

Scenarios of states in environment are qualitative assessments of different factors influencing companies. They takes into account the knowledge of the experts for determining the power to influence the processes occurring in the environment of the organization and assess the likelihood of occurrence of these events in the future.

The method usually involves 4 main scenarios:

• Optimistic Scenario
• Pessimistic scenario
• Surprise scenario
• The most likely scenario

Main steps for building scenario

1. Identification of the macro environment
   • The political sphere
   • The economic sphere
   • The social sphere
   • The demographic sphere
   • Technological sphere
   • Sphere of international affairs
2. Identification of the competitive environment:
   • customers
   • suppliers
   • competitors
   • substitute products
   • strategic groups
3. Selecting factors that have a decisive impact on company
4. Construction of the scale of assessments. negative influencing force (-5 to - 1) and the positive influencing force (from +1 to +5)
5. Assessment of relevant business processes. This evaluation included two parameters:
   • The strength of impact of a factor to the company on a scale of - 5 to +5.
   • The probability of occurrence of particular factor:
     • Upward trend in the future
     • Stabilizing of trend in the future
     • Downward trend
6. Creating of scenarios
   • Optimistic scenario - based on trends which have the greatest positive impact on business
   • The pessimistic scenario - based on trend which has the greatest negative impact on the organization
   • Surprise scenario - based on trends that have the least likelihood of occurrence.
   • The most likely scenario - all most probable trends.
7. Calculations
8. Graphical presentation of work results

Methods of inference

This method distinguishes five ways of inference.

• Analysis of turbulence and the degree of company dependence on changes in the environment.
• Analysis of spans in the most likely scenario in the various spheres of activity.
• Identification of spheres in which dominate either opportunities or threats.
• Identification of processes that have a strongest influence on an company in the most likely scenario.
• Assessment of power to influence of various factors on corporate strategy.

See also:

• Scenarios of processes in environment
• Strategic scenarios method

Scenarios of states in environment — recommended articles

TOWS analysis — Scenarios of possible events — Strategic risk — Change management in project — SPACE method — ASTRA analysis — EFE matrix — Hofer matrix — McKinsey matrix

References

• 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.