This article attempts to showcase, from a practitioner's perspective, some of the pitfalls and misconceptions that abound in the strategic planning process
Strategic Planning is among the most widely used and perhaps among the most abused management terminology in modern day business. If one were to ask the CEO of any large organization why Strategic Planning is needed, the responses would be varied:
The Strategic Planning Process – A Framework
Scenario planning, as a tool, helps immensely in this part of the process. Note that sensitivity analysis and scenario planning are sometimes used interchangeably, but they are different tools that are to be used for different objectives. Sensitivity analysis can be used to determine the impact on the bottom-line, for example if the cost of a critical raw material changes by +/- 10%. Scenario planning is relevant when you need to create a totally different view of the world based on legislation, policy framework, technology, etc. For instance, a changing tax regime for tobacco from specific taxation (fixed tax based on length of cigarette) to ad-valorem taxation (tax based on price) would call for a scenario planning type of exercise whereas the change in volume in response to a change in price would call for a sensitivity analysis. Similarly, the market growth of renewable energy in response to a change in subsidies/feed-in-tariffs, change in technology, etc. would call for a scenario planning type of exercise, whereas the market growth in a particular market on account of different adoption rates would call for a sensitivity analysis.
Reprint from Ivey Business Journal
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