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The Importance of Scenario Planning Functions for Company’s Performance in The Contemporary Environment

Year 2022, Volume: 5 Issue: 2, 173 - 193, 30.12.2022
https://doi.org/10.55065/intraders.1143265

Abstract

Today ‘s turbulent environment delivered through the global complexity and dynamic change requires from companies to develop the ability for researching the factors that initiate changes and capacity for anticipating the possible solutions to potential problems. Throughout history, the methods of forecasting and later the strategic planning, as way of establishing a vital link between the organization's future and the environment, are continuously applied. They complement themselves, but the strategic actions and business models they point out are limited only to the known events, factors and actors. With the scenario planning, companies develop plans for different alternative futures that may unfold and contain significant changes in the environment for which they otherwise have limited data. Through narratives and graphically presenting number of alternative stories about the future environment, companies actually include structurally different and unexpected future events, factors and actors in their plans and prepare adequate courses of actions for them. The purpose of this research paper is to emphasize the role that scenario planning has in dealing with uncertainty in the environment as the only certain element of the future, and thus to expose its functions it offers to managers to test their alternatives in dealing with potential constraints or seizing future opportunities. For the research, empirical research was conducted among 52 Macedonian companies by distributing questionnaires (online and physically) for determining the degree of application of scenario planning method and its functions.

References

  • Abdulai, M.M.; Robert, H.E.; &Amfo, A.P. (2018). Service innovation and customer satisfaction: the role of customer value creation. European Journal of Innovation Management, 21 (3): 402-422.https://doi.org/10.1108/EJIM-09-2017-0117.
  • Abuzaid, A. N. (2018). Scenario Planning as Approach to Improve the Strategic Performance of Multinational Corporations (MNCS). Business: Theory and Practice, 19: 195–207 https://doi.org/10.3846/btp.2018.20.
  • Aliya, B.& Maheen, M. (2017). The impact of organizational capabilities on organizational performance: empirical evidence from banking industry of Pakistan. Pakistan Journal of Commerce and Social Sciences, 11 (1): 408-438.
  • Arafet, B.& Ali, S. (2018). Scenario planning: an investigation of the construct and its measurement. Journal of Forecasting, 37 (4): 489-505. https://doi.org/10.1002/for.2515.
  • Azalia, J.& Stein, W. (2017). Strategic planning and scenario planning in public institutions: the case study of Pacific Alliance. FIIB Business 6 (3): 26-37. https://doi.org/10.1177/ 2455265820170306.
  • Amer, M.; Daim, T.U.& Jetter, A. (2013), A review of scenario planning, Futures, Vol. 46, pp.23-40.
  • Bennett, N.J.; Kadfak, A.& Dearden, P. (2016). Community-based scenario planning: a process for vulnerability analysis and adaptation planning to social–ecological change in coastal communities. Environ Dev Sustain 18: 1771-1799. https://doi.org/10.1007/s10668-015-9707-1.
  • Bielinska-Dusza, E. (2013), Concepts of Scenario Methods in Improvement of an Enterprise, Business, Management and Education, Vol.11, No.1, p.137.
  • Burt, G.; Mackay, D.J.; Heidjen, K.V.D.& Verheijdt, C. (2017). Openness disposition: readiness characteristics that influence participant benefits from scenario planning as strategic conversation. Technological Forecasting and Social Change, 124 (1): 16-25. https://doi.org/10.1016/j.techfore.2016.11.024.
  • Chermak, T.J. (2011), Scenario Planning in Organizations: How to create, use, and assess scenarios, Berrett-Koehler Publishers Inc., San Francisco.
  • Chermack, T.J.; Coons, L.M.; O’Barr, G.& Khatami, S. (2017). The effects of scenario planning on participant reports of resilience. European Journal of Training and Development ,41 (4): 306-326. https://doi.org/10.1108/EJTD-08-2015-0068.
  • Chow, C. W. & Stede,V.D. W. A. (2006). The use and usefulness of nonfinancial performance measures. Management Accounting Quarterly, 7(3), 1-8.
  • Collins, J. C., & Porras, J. I. (1996). Building your Company’s Vision. Harvard Business Review. https://hbr.org/1996/09/building-your-companys-vision.
  • Drew, S.A.W. (2006). Building technology foresight: using scenarios to embrace innovation. European Journal of Innovation Management, 9 (3): 241-257.
  • Glick, M. B.; Chermack, T. J.; Luckel, H.& Gauck, B. Q. (2012). Effects of scenario planning on participant mental models. European Journal of Training and Development.
  • Glassman, A. M.; Zell, D. & Duron, S. (2005, June 30). Thinking Strategically in Turbulent Times: An Inside View of Strategy Making: An Inside View of Strategy Making. Routledge.
  • Heijden, K.V.D. (1996). Scenarios: the art of strategic conversation. England: John Wiley and Sons.
  • Heijden, K.V.D.; Bradfield, R.; Burt, G.; Cairns, G. & Wright, G. (2002), The Sixth Sense: Accelerating Organizational Learning with Scenarios. John Wiley & Sons, Chichester.
  • Huss, W.R.& Honton, E.J. (1987). Scenario planning—What style should you use?. Long range planning, Vol.20, No.4, pp.21-29.
  • Inayatullah, S. (2009). Questioning scenarios. Journal of Futures Studies.13 (3): 75-80 http://jfsdigital.org/wp-content/uploads/2014/01/133-S01.pdf.
  • Kahn, H., & Wiener, A. J. (1967). The year 2000: A framework for speculation on the next thirty-three years. London: MacMillan Publishing Company.
  • Kaplan, R.S.& Norton, D.P. (1992). The Balanced Scorecard - Measures That Drive Performance. Harvard Business Review, 79.
  • Kaplan, R.& Norton, D. (2004). Strategy maps: converting intangible assets into tangible outcomes. Boston: Harvard Business School Press.
  • Kolb, D.A. (1984). Experimental learning: experience as the source of learning and development. Prentice Hall, Englewood Cliffs.
  • Kotler, P. & Caslione, J.A.(2009). Chaotics: the business of managing and marketing in the age of turbulence, 1st Edition, American Management Association, New York.
  • Kim, K.; Watkins, K.S. & Lu, Z. (2017). The impact of a learning organization on performance: Focusing on knowledge performance and financial performance. European Journal of Training and Development 41 (2): 177-193.
  • Kuye, O.L&, Oghojafor, B.A. (2011). Scenario planning as a recipe for corporate performance: the Nigerian manufacturing sector experience. International Journal of Business and Management, 6 (12): 170-179.
  • Leemhuis, J.P. (1985) Using scenarios to develop strategies. Long Range Planning, 18, 2, 30-37.
  • Lindgren, M. & Bandhold, H. (2009). Scenario Planning: The Link between Future and Strategy. Palgrave McMillan, New York.
  • Linneman, R.E. & Klein, H.E. (1985).Using Scenarios in Strategic Decision Making. Business Horizons, Vol.28, No.1.
  • Millett, S.M. (1988). How scenarios trigger strategic thinking. Long Range Planning, Vol.21, No.5, pp.61-68.
  • Senge, P. (2014). The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization. Crown.
  • Panigyrakis, G. G. & Theodoridis, P. K. (2009). Internal marketing impact on business performance in a retail context. International Journal of Retail and Distribution Management, 37(7), 600-628.
  • Phadnis, S.; Caplice, C., & Sheffi, Y. (2016). How scenario planning influences strategic decisions. MIT Sloan Management Review, 57(4), 24.
  • Phelps, R.; Chan, C. & Kapsalis, S.C. (2001). Does scenario planning affect performance? Two exploratory studies. Journal of Business Research, 51 (3): 223-232. https://doi.org/10.1016/s0148-2963(99)00048-x.
  • Phillips, P.; Davies, F. & Moutinho, L. (1999). The interactive effects of strategic planning on hotel performance: a neural network analysis. Management Decision Journal, 37(3), 279-288.
  • Prieto, I.M.& Revilla, E. (2006). Learning capability and business performance: a non-financial and financial assessment. The Learning Organization,13 (2/3): 166-185. https://doi.org/10.1108/09696470610645494.
  • Ramirez, R. & Wilkinson, A. (2016). Strategic Reframing: The Oxford Scenario Planning Approach. Oxford: Oxford University Press.
  • Raubitschek, R.S. (1988). Multiple scenario analysis and business planning. Advances in strategic management,5, 181-205.
  • Reibnitz, U. (I988). Scenario Techniques. McGraw-Hill, Hamburg.
  • Sarpong, D.& Maclean, M. (2011). Scenario thinking: a practice-based approach for the identification of opportunities for innovation. Futures, 43: 1154-1163. https://doi.org/10.1016/j.futures.2011.07.013.
  • Schoemaker, P.J.H. (1995), Scenario Planning: A Tool for Strategic Thinking. Sloan Management Review, Vol.36, No.5, pp.1-25.
  • Schwartz, P. (1991). The Art of the Long View. Currency Doubleday.
  • Schwartz, P. (1996). The Art of the Long View: Planning for the Future in an Uncertain World. Currency Doubleday.
  • Swanson, R. A.& Holton, E. F (2001). Foundations of Human Resource Development. San Franciso: Berrett-Koehler.
  • Visser, M. P., & Chermack, T. J. (2009). Perceptions of the relationship between scenario planning and firm performance: A qualitative study. Futures, 41(9), 581-592.
  • Wack, P. (1985). Scenarios, shooting the rapids. Harvard Business Review, Vol. 63, No.6, pp. 139-150.
  • Westerlund, M.; Leminen, S. & Rajahonka, M. (2014). Designing business models for the internet of things. Technology Innovation Management Review, Vol. 4 No. 7, pp. 5–14.
  • Weng, M.; Ha, J.; Wang,Y.& Tsai, C. (2012). A study of the relationship among service innovation, customer value and customer satisfaction: an empirical study of the hotel industry in Taiwan. International Journal of Organizational Innovation, 4 (3): 98-112.
  • Wright, A.D. (2000). Scenario planning: a continuous improvement approach to strategy. Total Quality Management, Vol.11, No.4-6, pp.433-438.
Year 2022, Volume: 5 Issue: 2, 173 - 193, 30.12.2022
https://doi.org/10.55065/intraders.1143265

Abstract

References

  • Abdulai, M.M.; Robert, H.E.; &Amfo, A.P. (2018). Service innovation and customer satisfaction: the role of customer value creation. European Journal of Innovation Management, 21 (3): 402-422.https://doi.org/10.1108/EJIM-09-2017-0117.
  • Abuzaid, A. N. (2018). Scenario Planning as Approach to Improve the Strategic Performance of Multinational Corporations (MNCS). Business: Theory and Practice, 19: 195–207 https://doi.org/10.3846/btp.2018.20.
  • Aliya, B.& Maheen, M. (2017). The impact of organizational capabilities on organizational performance: empirical evidence from banking industry of Pakistan. Pakistan Journal of Commerce and Social Sciences, 11 (1): 408-438.
  • Arafet, B.& Ali, S. (2018). Scenario planning: an investigation of the construct and its measurement. Journal of Forecasting, 37 (4): 489-505. https://doi.org/10.1002/for.2515.
  • Azalia, J.& Stein, W. (2017). Strategic planning and scenario planning in public institutions: the case study of Pacific Alliance. FIIB Business 6 (3): 26-37. https://doi.org/10.1177/ 2455265820170306.
  • Amer, M.; Daim, T.U.& Jetter, A. (2013), A review of scenario planning, Futures, Vol. 46, pp.23-40.
  • Bennett, N.J.; Kadfak, A.& Dearden, P. (2016). Community-based scenario planning: a process for vulnerability analysis and adaptation planning to social–ecological change in coastal communities. Environ Dev Sustain 18: 1771-1799. https://doi.org/10.1007/s10668-015-9707-1.
  • Bielinska-Dusza, E. (2013), Concepts of Scenario Methods in Improvement of an Enterprise, Business, Management and Education, Vol.11, No.1, p.137.
  • Burt, G.; Mackay, D.J.; Heidjen, K.V.D.& Verheijdt, C. (2017). Openness disposition: readiness characteristics that influence participant benefits from scenario planning as strategic conversation. Technological Forecasting and Social Change, 124 (1): 16-25. https://doi.org/10.1016/j.techfore.2016.11.024.
  • Chermak, T.J. (2011), Scenario Planning in Organizations: How to create, use, and assess scenarios, Berrett-Koehler Publishers Inc., San Francisco.
  • Chermack, T.J.; Coons, L.M.; O’Barr, G.& Khatami, S. (2017). The effects of scenario planning on participant reports of resilience. European Journal of Training and Development ,41 (4): 306-326. https://doi.org/10.1108/EJTD-08-2015-0068.
  • Chow, C. W. & Stede,V.D. W. A. (2006). The use and usefulness of nonfinancial performance measures. Management Accounting Quarterly, 7(3), 1-8.
  • Collins, J. C., & Porras, J. I. (1996). Building your Company’s Vision. Harvard Business Review. https://hbr.org/1996/09/building-your-companys-vision.
  • Drew, S.A.W. (2006). Building technology foresight: using scenarios to embrace innovation. European Journal of Innovation Management, 9 (3): 241-257.
  • Glick, M. B.; Chermack, T. J.; Luckel, H.& Gauck, B. Q. (2012). Effects of scenario planning on participant mental models. European Journal of Training and Development.
  • Glassman, A. M.; Zell, D. & Duron, S. (2005, June 30). Thinking Strategically in Turbulent Times: An Inside View of Strategy Making: An Inside View of Strategy Making. Routledge.
  • Heijden, K.V.D. (1996). Scenarios: the art of strategic conversation. England: John Wiley and Sons.
  • Heijden, K.V.D.; Bradfield, R.; Burt, G.; Cairns, G. & Wright, G. (2002), The Sixth Sense: Accelerating Organizational Learning with Scenarios. John Wiley & Sons, Chichester.
  • Huss, W.R.& Honton, E.J. (1987). Scenario planning—What style should you use?. Long range planning, Vol.20, No.4, pp.21-29.
  • Inayatullah, S. (2009). Questioning scenarios. Journal of Futures Studies.13 (3): 75-80 http://jfsdigital.org/wp-content/uploads/2014/01/133-S01.pdf.
  • Kahn, H., & Wiener, A. J. (1967). The year 2000: A framework for speculation on the next thirty-three years. London: MacMillan Publishing Company.
  • Kaplan, R.S.& Norton, D.P. (1992). The Balanced Scorecard - Measures That Drive Performance. Harvard Business Review, 79.
  • Kaplan, R.& Norton, D. (2004). Strategy maps: converting intangible assets into tangible outcomes. Boston: Harvard Business School Press.
  • Kolb, D.A. (1984). Experimental learning: experience as the source of learning and development. Prentice Hall, Englewood Cliffs.
  • Kotler, P. & Caslione, J.A.(2009). Chaotics: the business of managing and marketing in the age of turbulence, 1st Edition, American Management Association, New York.
  • Kim, K.; Watkins, K.S. & Lu, Z. (2017). The impact of a learning organization on performance: Focusing on knowledge performance and financial performance. European Journal of Training and Development 41 (2): 177-193.
  • Kuye, O.L&, Oghojafor, B.A. (2011). Scenario planning as a recipe for corporate performance: the Nigerian manufacturing sector experience. International Journal of Business and Management, 6 (12): 170-179.
  • Leemhuis, J.P. (1985) Using scenarios to develop strategies. Long Range Planning, 18, 2, 30-37.
  • Lindgren, M. & Bandhold, H. (2009). Scenario Planning: The Link between Future and Strategy. Palgrave McMillan, New York.
  • Linneman, R.E. & Klein, H.E. (1985).Using Scenarios in Strategic Decision Making. Business Horizons, Vol.28, No.1.
  • Millett, S.M. (1988). How scenarios trigger strategic thinking. Long Range Planning, Vol.21, No.5, pp.61-68.
  • Senge, P. (2014). The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization. Crown.
  • Panigyrakis, G. G. & Theodoridis, P. K. (2009). Internal marketing impact on business performance in a retail context. International Journal of Retail and Distribution Management, 37(7), 600-628.
  • Phadnis, S.; Caplice, C., & Sheffi, Y. (2016). How scenario planning influences strategic decisions. MIT Sloan Management Review, 57(4), 24.
  • Phelps, R.; Chan, C. & Kapsalis, S.C. (2001). Does scenario planning affect performance? Two exploratory studies. Journal of Business Research, 51 (3): 223-232. https://doi.org/10.1016/s0148-2963(99)00048-x.
  • Phillips, P.; Davies, F. & Moutinho, L. (1999). The interactive effects of strategic planning on hotel performance: a neural network analysis. Management Decision Journal, 37(3), 279-288.
  • Prieto, I.M.& Revilla, E. (2006). Learning capability and business performance: a non-financial and financial assessment. The Learning Organization,13 (2/3): 166-185. https://doi.org/10.1108/09696470610645494.
  • Ramirez, R. & Wilkinson, A. (2016). Strategic Reframing: The Oxford Scenario Planning Approach. Oxford: Oxford University Press.
  • Raubitschek, R.S. (1988). Multiple scenario analysis and business planning. Advances in strategic management,5, 181-205.
  • Reibnitz, U. (I988). Scenario Techniques. McGraw-Hill, Hamburg.
  • Sarpong, D.& Maclean, M. (2011). Scenario thinking: a practice-based approach for the identification of opportunities for innovation. Futures, 43: 1154-1163. https://doi.org/10.1016/j.futures.2011.07.013.
  • Schoemaker, P.J.H. (1995), Scenario Planning: A Tool for Strategic Thinking. Sloan Management Review, Vol.36, No.5, pp.1-25.
  • Schwartz, P. (1991). The Art of the Long View. Currency Doubleday.
  • Schwartz, P. (1996). The Art of the Long View: Planning for the Future in an Uncertain World. Currency Doubleday.
  • Swanson, R. A.& Holton, E. F (2001). Foundations of Human Resource Development. San Franciso: Berrett-Koehler.
  • Visser, M. P., & Chermack, T. J. (2009). Perceptions of the relationship between scenario planning and firm performance: A qualitative study. Futures, 41(9), 581-592.
  • Wack, P. (1985). Scenarios, shooting the rapids. Harvard Business Review, Vol. 63, No.6, pp. 139-150.
  • Westerlund, M.; Leminen, S. & Rajahonka, M. (2014). Designing business models for the internet of things. Technology Innovation Management Review, Vol. 4 No. 7, pp. 5–14.
  • Weng, M.; Ha, J.; Wang,Y.& Tsai, C. (2012). A study of the relationship among service innovation, customer value and customer satisfaction: an empirical study of the hotel industry in Taiwan. International Journal of Organizational Innovation, 4 (3): 98-112.
  • Wright, A.D. (2000). Scenario planning: a continuous improvement approach to strategy. Total Quality Management, Vol.11, No.4-6, pp.433-438.
There are 50 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Andrijana Bojadjievska Danevska 0000-0001-8969-0105

Early Pub Date December 29, 2022
Publication Date December 30, 2022
Submission Date July 12, 2022
Acceptance Date November 11, 2022
Published in Issue Year 2022 Volume: 5 Issue: 2

Cite

APA Bojadjievska Danevska, A. (2022). The Importance of Scenario Planning Functions for Company’s Performance in The Contemporary Environment. InTraders International Trade Academic Journal, 5(2), 173-193. https://doi.org/10.55065/intraders.1143265

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