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Scenario Thinking Approach

Introduction

This paper analyzes the usage of scenario thinking approach in decision-making process of any given organization. In order to achieve this objective the essay will have a deeper analysis of the approach to the question in comparison with orthodox approach to strategic planning. Decision-making is the process in which a manager makes a decision from a set of alternative courses of actions and chooses the best course of action to be taken in order to achieve the organization goals and objectives. There are a number of approaches that are used by managers in organizations which help in making their short and long-term plans. Scenario planning approach and orthodox strategic approach are some of the approaches that are used in decision-making process. Scenario planning involves a system of thinking, whereby there is a need to recognize that many factors can be combined in complex ways and result in creation of surprising futures. This approach allows the inclusion of those factors that are in a way difficult to formalize, for example, a sharp shift in values. On the other hand, orthodox planning is a process of making a decision, without following predetermined procedures. That is there is no agreed way of making plans. The two approaches will be compared using the examples of situations where scenario is best used in decision-making process by managers.

benefits

Environment analysis

Managers are usually involved in the process of analyzing the organizational environment in order to identify the organization’s weaknesses, strengths, opportunities and threats. Scanning both internal and external environments is very crucial for the long time survival of the business. It helps the business to take advantage of available opportunities such as market or expansion opportunities which may play a major role in the long run growth of the organization. Environment scanning also helps managers to identify organization’s weaknesses and, thus, they come up with measures of preventing the organization activities being negatively affected by these weaknesses (Anthony & Kahn 1967). Scenario thinking approach is very useful in scanning organizational environment, it helps the managers to follow a certain set of procedures in dealing with various scenarios that arise within an organization (Kaln 1965). It makes the process of scanning the environment an easy one for managers and it also enables the managers to come up with long-term plans that are crucial for the long run success of the organization. On the other hand, orthodox planning makes the decision making process more complex for managers as there are no set guidelines in dealing with certain situations that an organization faces in its day to day operations. This causes delays in the decision-making process and thus, may have a negative impact on the organization.

Scenario Planning

Sometimes managers are called upon to make plans regarding various scenarios that an organization faces. In order to make scenario planning more flexible and easier for the managers there should be set guidelines and tools within their reach that can aid them in this process. For example, an organization may be faced with a situation where its sales are on a decline trend. In this kind of a situation managers are called upon to come up with measures that will help the organization manage the situation before it is out of hand. Scenario thinking is the best approach to use in this kind of situation in comparison to orthodox planning. The approach provides tools and guidelines that aid the management in scenario planning. This make the process fast and it also enables the managers to make informed decisions (Godet & Fabrice, 1996).

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Corporate Strategy

It is the role managers to develop a corporate strategy, which acts as guideline to various stakeholders of the organization. The corporate strategy contains the goals and objectives of the organization within a set frame of time. It helps the organization plan ahead its future courses of actions and outline measures that will be used in order to achieve the organization goals. The corporate strategy encompasses all departmental goals within an organization (Berger, 1964). For example, an organization may be planning to go public within the next five years. The corporate strategic plan provides the guideline of measures that should be taken in order for the organization to achieve its goal after five years. Scenario planning helps managers to come up with plans for each set of scenarios that organization is faced with. It has helped in laying down procedures of dealing with each situation. Therefore, it enables managers to come up with a corporate strategy that takes into account all forms of scenarios and how to manage them best.

Conclusion

Scenario planning approach in the decision-making process in organizations is very useful in the strategic planning of the organization. This approach provides the management with tools of dealing with different set of situations. Thus, it makes the decision-making process more flexible, easier and faster to carry out. It helps the management to analyze the environment successfully, scenario planning and finally in the development of corporate strategy. Scenario thinking planning is more effective and efficient way of decision making in any given organization compared to orthodox strategic planning.

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