Benefits Of Scenario Planning And Systems Thinking Business Essay

Benefits Of Scenario supplying And Systems Thinking Business EssayScenario Planning substructureToday, organizations be increasingly affected by the growing uncertainty from the macro- surround.. In recent years, it is very common to see some organizations suddenly get into a recession or even fall into crisis because of some changes of external factors. These companies live one thing in common, that is, they all fail to watch into account the afterlife. And direct a powerful tool which used largely by businesses to solve this problem Scenario homework. It is a tool which fag end encourage organizations conceptualise about the future , grasp the trend to look for new profit growth in an uncertain future, help decision get downrs reshape the mental models and find the correct armorial bearing of the future.( Bill and Ian , 2008 )In graze to make us have a remedy understanding of scenario planning, the following issues forget be discussed Benefits of Scenario Planning, difficulties of implementing scenario planning, PEST Analysis oer the period to 2030, risks and opportunities organisations will face and the follow out plans.Benefits of Scenario PlanningScenario planning is a tool of strategic decision-making that does not focus on accurately predicting the future, but is a process that throws a number of possible futures that are credible yet uncertain (Schoemaker, 1995). Thither is no doubt that companies can gain benefit from scenario planning, and here are the sev agel strengths of scenario planning.Systems thinkingBy using the scenario planning manager can have a systems thinking. Like smart chess players always think clearly and have a variety of possible scenarios in the nigh steps , the scenario planning can provide manager a preventive instrument , before problems occur, manager can deduction the possible scenarios based on a series of logic and empirical facts through the business acumen and the warm perception, seeing trends in th e evolution of things ,shape and the sham of changing trends in the structure. (Mbalib,2007)In addition,through scenario planning, managers can use systems thinking, take into account the various factors which they think will capture the decision to make a overall well-depth compend, and to avoid narrow personal bias.The optimal allocation of resourcesUsing the scenario planning , companies can predict the possible future scenarios, so that managers can be more aware of the external environment and their keep companys status and future directions therefore they can match internal resources to external environment to allocate the resources more effective and rational.Risk ReductionScenario planning help us understand today better by imagining tomorrow , it is good to help organizations deal with the future uncertainties by aware of the weak signals and let them get better prepare to handle new situations to keep business alive and flourishing.Difficulties of implementing Scenario planningScenario planning as a business tool which is aim to help organizations make right decisions, muffle risk, save m and maximum profit. Though the aims of organisations who play the scenario planning are the same, there are many inherent difficulties for organisations of differing sizes in implementing Scenario Planning for the first time.Usually, all the company will faced with these difficultiesCostThe be of scenario planning really depends on the numerous variables such as the organization size, timeframe of the scenarios, teams and those partnering in the strategic planning process and methods of analysis and data collection voluminous in the planning processTimeTo make an accurate predictions of scenario is very time-consuming. Usually, scenario planning could take around 6 to 12 months for some organizations engaging in depth, multi scenario planning. Data and randomness from different sources have to be collected and interpreted which makes scenario building eve n more time-consuming.ResourcesScenario planning requirement to use various resources, in addition to money, with the propose of forming a scenario counsel team it need the external experts to cooperate with internal staff, whats more, it also need the companys data resources from different departments.Small companiesFor a small business, such as self-employed and partnerships, they generally just have a short-term plan with the goal of maximum profits, and usually make decisions comparatively easy just simply focus on cost, price and output decisions. As for a small business, they has few competitors and the external business environment is relatively stable and certain which has little effect on their business.Since the first time implementing scenario planning, companies may not well aware of the real needs of the company, though they do not need a complex scenario planning, do not need to have such high sensitivity of external influences, do not need such resources, technical staff they may lock spend too much time and money on it which will extend the costs of company and may not take advantage from scenario planning.Large, multinational companiesWith the turbulent external business environment and the increasing competition it is necessary for large, multinational companies to adopt Scenario Planning in order to survive and prosper.Although large companies have abundant resources or admittance to the necessary resources in terms of expertise, time and money, there are still many inherent difficulties for organisations in implementing Scenario Planning for the first time.How far ahead should organizations predictThe time horizon for scenarios must be short enough to create scenarios that are probable, but long enough for us to imagine that important changes with an impact on the future business can take place. (Lindgren, M. and Bandhold, H. (2003))How long should organizations take into consider ,it is a vital issue. With the accelerated pace of hu mans change, the further predict, the more complex. More aspect need to consider, and the predictions are less accurate. However, if the prediction of the time too close it will not achieve any effect.How many scenariosFor a company it is not necessary to say that the more scenario planning the better future of the company and of course, it make no sense of the company development if company has too little scenario planning. All the scenario planning need to prepare action plans and corresponding measures, have too much scenario planning not only take times and waste money but also may increase the operational costs of the company, however, if with few scenario planning it cannot help company predict the future to avoiding the risksPEST Analysis over the period to 2030Today, due to increasing appertain for sustainable development, global economic competition and technological advances ,change is happening faster than before which increased the business uncertainty . For this reason , scenario planning has been unprecedented attention. In order to make the correct prediction of what might happen in the business environment over the period to 2030 , it is important to have an understanding of what are the fundamental drivers of external change .The best way to do this is to monitor and analyze trends and scan the current environment. There is a particularly useful tool -PEST (Political, Economic, Social, scientific) analysis can help organization to identify the different intensitys. http//www.jiscinfonet.ac.uk/tools/scenario-planning/trend-analysisPoliticalBRICK adding new memberSouth Africa.BRICK expanded five-member bloc known as the BRICS, which groups Brazil, Russia, India, China, and, for the first time, South Africa. (Mainichi,2011)The expansion of the BRICS have a great impact in the western business environment over the period to 2030. Since BRIC countries are facing a great historical chance for development, their development will bring a significa nt impact on the global economy and global structure .According to the global economic report of Goldman Sachs (Dreaming with BRICs The fashion to 2050), BRICs will guide the world economy in 2050 coquettish. And BRIC has been trying to expand its influence which make the western countries have to be careful to look at the beside step plans of these emerging economies . In addition, more and more international investors are divide their asset allocation according to the BRIC. And ONeill, chief economist at Goldman Sachs, verbalise the BRIC will catch-up G6 in the next 20 years.EconomicGlobalizationIt can be said that the developed countries led economic globalization as they master the worlds most advanced productivity and technology. However, according to the annual World Economic Report which published by The World Bank reported that by 2030, the global economy will grow from 35 trillion U.S. dollars in 2005 to expand to 72 trillion dollars, the share of total global output of growing countries will from the current 1 / 5 to nearly 1 / 3 and the share of the global purchasing power will occupy more than 1 / 2. Report also highlighted a general underlying trend in the next 25 years, developing countries will be a major force in global economic growth. (Sujingxiang,2006)Over the period to 2030, with the spread of new technologies such as the Internet, developing countries will go from the periphery to the center of the world economy, and gradually grow into an important engine for global growth, however , the developed countries, the influence on globalization is weakening , some organization and workers of developed countries were impact by the developing countries, particularly in emerging economies competition. Manufacturing and other traditional industries were in trouble which increased unemployment and the downward pressure on wages.(Haoran, 2009)Social depart in consumer behavior patternAs technology developed, people gradually changed their consum ption habits, staying at home, online shopping has become a way of life that are interested by Internet users.The eMarketer estimates that over 68% of UK sack users ages 14 and older will buy online at least once per month in 2011-a total of more than 27 million people.It estimated that between 2009 and 2014 he size of the UK online shoppers will continues to grow, penetration rate of online shopping users in 2014 will reach 71.1%. And the UK online shoppers will continue to increase in the future.http//www.emarketer.com/Report.aspx?code=emarketer_2000779Since more and more people prefer online shopping and the number of people seems keep increasing, it can be said the online shopping represent the future direction of business. Face with this huge online consumer groups, organizations should seize the opportunity to develop the online shopping channels. However, The online shopping will change the business environment over the period to 2030. It will change the competitive basis an d competitive approach among the organizations. E-commerce is information-based, the level of the access to information determine the market competitiveness of organizations .TechnologicalWeb 4.0 is transforming the Internet landscapeaccording to Spivaks predictions, by the year of 2031 the next generation of internetWeb 4.0 will appear which further convergence of the online and physical worldhttp//www.zmogo.com/ sack/web-40trip-down-the-rabbit-hole-or-brave-new-world/Technology innovation will also influence the business environment during the period of now to 2030, With Web 4.0 which increase speeds and bandwidth, coupled with high-speed wireless access will enable information exchange on an unprecedented level.RisksCompetitionThe expansion of the BRICS and the increasing globalization will lead to more competitors from developing countries such as China and India. Similarly, with the increasing number of Internet users and network development, e-commerce appears which changes th e business environment, reducing the trade entry barriers, blurred industry boundaries and expanding the scope for competition.Information managementThe improvement of network technology will allows us to enter an information age, as the network is free and open which will make the global information more transparent, everyone can master the competitors product information and marketing dynamics.OpportunitiesE-commerceE-commerce can significantly reduce inventory costs. Compared with the traditional commerce, E-commerce with high speed and fewer links, whats more, it does not have pressure on inventory, a well-run electronic store can even be zero inventory, no bear any pressure on the stock which will save a considerable costs.InternetOver the past 20 years the revolution of Internet has changed business model, and similarly, in the next 20 years, the networks development will bring new opportunities to the organization. With increasing speeds and bandwidth, coupled with high-speed wireless access will enable information exchange on an unprecedented level organizations can use business information effectively to fully serve their customers and attract more customers. Whats more, they can also open up international markets and change production environment in order to gain more profits.Action plansSince We have listed the key factors of the changes of macro environment in the next 20 years and also found out the opportunities and risks which company may experience in the future .In order to survive and make the company prosperous, companies should make some corresponding countermeasures.Improve management systemsWith the next generation of internetWeb 4.0 appears and the increasing online shoppers , organizations should improve their management systems in order to catch the pace of business.Organization can adopt the commodity cloud computing and during the production process , using the computer-aided design and manufacturing (CAD / CAM) based on the manageme nt information systems (MIS) to establish the computer integrate manufacturing system (CIMS).Using these new manage methods to combine the production technology and information technology together and to upgrade the traditional mode of management system.(Shizhenxi,2010)Focus on global strategyIt can be said that with the economic globalization, the increasing integration of world economy is becoming an unstoppable trend, the world is entering an era of borderless competition. Only focus on the domestic market is not enough, organization should develop foreign markets.Organization should develop and allocate resources in global in order to survive and prosper in the future.Organization can gradually develop and allocate the capital, labor, technology, resource from domestic to global. Distribute the capital according to different regions to reduce financial risks, establish appropriate technology development centre in different regions to gain the local advantage in order to enhance their technology competitiveness .ConclusionLindgren, M. and Bandhold, H. (2003) Scenario Planning The Link Between Future and Strategy. Basingstoke, Palgrave MacMillan. (pg53)Scenario Planning Handbook Bill Ralston)(Ian Wilson2008 http//product.china-pub.com/826843ref=browse2007, http//wiki.mbalib.com/wiki/%E6%83%85%E6%99%AF%E8%A7%84%E5%88%92http//www.jiscinfonet.ac.uk/tools/scenario-planning/trend-analysis(Mainichi,2011) http//mdn.mainichi.jp/mdnnews/business/news/20110414p2g00m0bu044000c.html(Sujingxiang,2006)http//news.xinhuanet.com/world/2006-12/22/content_5518332.htm(Haoran, 2009)http//www.zh09.com/lunwen/jjx/gjjj/200912/373158.html (-)14 Web 4.0,Trip Down the Rabbit Hole or Brave New World?, zmogo.comhttp//www.zmogo.com/web/web-40trip-down-the-rabbit-hole-or-brave-new-world.Accessed 7th June 2009.(Shizhenxi,2010)http//www.fenghuang163.com/blog/article/327.htmlhttp//www.chinact.org.cn/Html/200672714031-1.htmlhttp//www.facebook.com/note.php?note_id=192147837462567http//blog.si na.com.cn/s/blog_65e8dd750100ny4h.html()Schoemaker, P.J.H. and van der Heijden K. (1992) Integrating Scenarios into Strategic Planning at Royal Dutch/Shell, Planning Review. Vol. 20 (3) pp.41-46.