The operating environment for many businesses is increasingly affected by social and political pressures, in addition to economic and technological ones. The need for systematic planning is generally accepted by business, but until recently it covered only the economic and technological aspects of its environment - social and political trends were taken into account only implicitly. There is nothing new in saying that societal dimensions are relevant. What is new is the attempt to develop planning procedures in which the more qualitative social aspects are explicitly considered. The development of multiple scenarios has provided such a mechanism. Each of the scenarios must be internally consistent, but discontinuities can be built in to them, so that "the future" need not reflect the past to any great degree. In addition, these scenarios provide the basis for scanning and monitoring the business environment. This paper describes two scenarios : a "hard times" for the United Kingdom; and "hard times" for the United States. The presentations of each are quite different, and illustrate the variety of ways in which scenarios can be developed. The final section of the paper provides a brief description of the development and use of scenarios.
The term âscenarioâ is familiar to those involved in forecasting, but too few people are aware of what exactly a scenario is, or how it can best be developed and applied. The author describes a method developed over several years in response to a need which most forecasting efforts have left unfulfilled. The method enables quantitative and qualitative forecasts to be combined in a manner which can be directly related to an organisationâs planning and decision-making processes, and which permits the evaluation of a companyâs objectives and performance in the light of those forecasts. The analysis of an organisationâs likely performance in given scenarios can, in turn, provide a basis for contingency planning.
In developing scenarios, the four main areas generally considered are economics, technology, society, politics. Business is accustomed to relating the potential state of the economy to its operations in terms of business confidence; willingness and ability to invest; availability of finance; interest rates; inflation and so forth. Similarly, in areas of technological change, the technologies examined are generally competitive or complementary and are evaluated in terms of their feasibility, acceptability, cost, etc. These two areas can be related quite clearly to the functions of finance, investment, RSD and strategic planning.