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Benefits of Using Scenarios

 

The Navigator scenario planning approach has several important benefits:

  • It challenges managers and other stakeholders to think in creative and forward-looking terms beyond the normal 1-2 year business plan approach;
  • It questions assumptions about the future, and about the drivers and forces that influence a specific sector of activity;
  • It draws upon resources within a company as well as within its wider stakeholder group: shareholders, suppliers, customers, regulators, etc.;
  • It fosters group work, communication and planning within the company, as the nomination of the scenario planning group must rely on different stakeholders;
  • It complements and illuminates standard strategic planning.

Typical industries and sectors that benefit from scenario planning include:

Tourism

Industry operators tend to focus on historical events, such as September 11th; SARS; the Middle Eastern crisis, etc. and their impact on business. They tend to ignore other factors, such as the continual impact of competition on pricing or the effects of technology. The development of scenarios and an appropriate strategic response plan would help plan strategic expansion and critical responses to emerging trends. This affects all tourism players, including hotels, travel agents, tour operators, the national tourism authority, and others.

Finance

The risk management strategy of banks and other financial institutions is usually viewed through the prism of single loans and clients. Scenario planning can help financial institutions understand the impact of events on entire sectors of the economy. Factors would include the impact of enlargement on corporate activity, investment and real estate values; the threat of competition; the impact of technology and other factors.

Shipping

Beyond the boom-and-bust cycle, shipping today is affected by a number of long-term factors. First among these is the boom in the Chinese container and bulk transport market, which may be unsustainable based on emerging indicators. A second major impact is the regulation of shipping safety, and an emerging EU consensus on new regulations, including double hulls, transparent ownership and marine safety.

Power Generation

Carbon emissions, deregulation, digital monitoring of power consumption, the growth of renewable energies and the emergence of micropower are major trends in this sector. Rapid consumer growth in China and India is contributing both to rising prices and growing emissions. Scenario planning helps energy companies and authorities prepare for future developments in the sector.

Telecommunications

The current market liberalisation enforced by the EU is again only one factor. Others include first- and second-generation wireless networks, which are rapidly transforming into data networks. This promises to replace expensive fixed telecoms wires and transform business models in their entirety.

Construction and Property Development

Companies typically have to deal with a range of risks and trends in their respective markets. Scenario planning helps clarify uncertainties in product and regional markets.