Using Scenario Planning to Reshape Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Using Scenario Planning to Reshape Strategy
This is an MIT Sloan Management Review article. In recent years, organizations have been caught off guard by economic volatility, unexpected political events, natural disasters, and disruptive innovations. In response, the authors note, executives are showing a new interest in scenario planning. Rather than tying their company's future to a strategy geared to one set of events, executives are coming to the view that smart management benefits from a richer understanding of the present possibilities afforded from multiple views about possible futures.Scenario planning came to prominence following World War II and gained recognition in the corporate world in the late 1960s and early 1970s. While several different approaches to scenario planning have emerged since then, this article focuses specifically on the Oxford scenario planning approach. Rather than taking a probabilistic stance (that is, making predictions in percentage terms or as best-case/worst-case scenarios) or a normative stance (that is, envisioning what a future should look like), the Oxford scenario methodology is based on plausibility. By recognizing the part of uncertainty that is unpredictable and by actively exploring the sources of the turbulence and uncertainty, the goal is to iteratively and interactively generate new knowledge and insights to help organizations reperceive their circumstances. During periods of turbulence, unpredictable uncertainty, novelty, and ambiguity (what the authors refer to as TUNA conditions), organizations frequently experience serious challenges that threaten existing value chains, communities, and even whole fields of endeavor. Such conditions can be unsettling and destabilizing on many different levels. A core feature in the Oxford scenario planning approach is making a distinction between the immediate business environment an organization inhabits (where business transactions take place) and the broader environment, or context, in which it operates. Different organizations go about scenario planning in different ways -there is no cookie-cutter methodology, the authors write. This article examines two cases. The first case involves Rolls-Royce plc, a leading supplier of power systems for aircraft and the marine and energy markets; the second case looks at the Royal Society of Chemistry, a London, U.K.-based international organization involved in advancing the field of chemical sciences. In addition to showing how these organizations used scenario planning, the authors discuss the challenges and opportunities of scenario planning more broadly.
Authors :: Rafael Ramirez, Steve Churchhouse, Jonas Hoffman, Alejandra Palermo
Swot Analysis of "Using Scenario Planning to Reshape Strategy" written by Rafael Ramirez, Steve Churchhouse, Jonas Hoffman, Alejandra Palermo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Scenario Planning facing as an external strategic factors. Some of the topics covered in Using Scenario Planning to Reshape Strategy case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Using Scenario Planning to Reshape Strategy casestudy better are - – digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, geopolitical disruptions, there is backlash against globalization, there is increasing trade war between United States & China,
cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Using Scenario Planning to Reshape Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Using Scenario Planning to Reshape Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Scenario Planning, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Scenario Planning operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Using Scenario Planning to Reshape Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Using Scenario Planning to Reshape Strategy case study
2. Improving business portfolio management of Scenario Planning
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Scenario Planning
Strengths Using Scenario Planning to Reshape Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scenario Planning in Using Scenario Planning to Reshape Strategy Harvard Business Review case study are -
Organizational Resilience of Scenario Planning
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Scenario Planning does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Scenario Planning has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Using Scenario Planning to Reshape Strategy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Scenario Planning digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Scenario Planning has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– Scenario Planning is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Rafael Ramirez, Steve Churchhouse, Jonas Hoffman, Alejandra Palermo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Scenario Planning has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Using Scenario Planning to Reshape Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Scenario Planning is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Scenario Planning in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Scenario Planning has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Scenario Planning has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Scenario Planning in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Scenario Planning in the sector have low bargaining power. Using Scenario Planning to Reshape Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Scenario Planning to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Scenario Planning has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Diverse revenue streams
– Scenario Planning is present in almost all the verticals within the industry. This has provided firm in Using Scenario Planning to Reshape Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Scenario Planning is one of the leading recruiters in the industry. Managers in the Using Scenario Planning to Reshape Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Using Scenario Planning to Reshape Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Using Scenario Planning to Reshape Strategy are -
Capital Spending Reduction
– Even during the low interest decade, Scenario Planning has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Using Scenario Planning to Reshape Strategy, is just above the industry average. Scenario Planning needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Using Scenario Planning to Reshape Strategy, it seems that the employees of Scenario Planning don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of Scenario Planning, firm in the HBR case study Using Scenario Planning to Reshape Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Scenario Planning is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Using Scenario Planning to Reshape Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Rafael Ramirez, Steve Churchhouse, Jonas Hoffman, Alejandra Palermo suggests that, Scenario Planning is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Aligning sales with marketing
– It come across in the case study Using Scenario Planning to Reshape Strategy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Using Scenario Planning to Reshape Strategy can leverage the sales team experience to cultivate customer relationships as Scenario Planning is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Using Scenario Planning to Reshape Strategy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Scenario Planning has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Scenario Planning has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Scenario Planning is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Scenario Planning needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Scenario Planning to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Scenario Planning has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Using Scenario Planning to Reshape Strategy should strive to include more intangible value offerings along with its core products and services.
Opportunities Using Scenario Planning to Reshape Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Using Scenario Planning to Reshape Strategy are -
Using analytics as competitive advantage
– Scenario Planning has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Using Scenario Planning to Reshape Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Scenario Planning to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Scenario Planning can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Scenario Planning to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Scenario Planning to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Scenario Planning can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Using Scenario Planning to Reshape Strategy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Scenario Planning to increase its market reach. Scenario Planning will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Scenario Planning can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Scenario Planning can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Scenario Planning has opened avenues for new revenue streams for the organization in the industry. This can help Scenario Planning to build a more holistic ecosystem as suggested in the Using Scenario Planning to Reshape Strategy case study. Scenario Planning can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Scenario Planning in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Scenario Planning can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Using Scenario Planning to Reshape Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Scenario Planning is facing challenges because of the dominance of functional experts in the organization. Using Scenario Planning to Reshape Strategy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Scenario Planning can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Scenario Planning can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Learning at scale
– Online learning technologies has now opened space for Scenario Planning to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Using Scenario Planning to Reshape Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Using Scenario Planning to Reshape Strategy are -
Shortening product life cycle
– it is one of the major threat that Scenario Planning is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Scenario Planning demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Scenario Planning.
Increasing wage structure of Scenario Planning
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Scenario Planning.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Scenario Planning business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Scenario Planning can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Scenario Planning needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Scenario Planning can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Using Scenario Planning to Reshape Strategy .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Scenario Planning in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Scenario Planning can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Scenario Planning high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Using Scenario Planning to Reshape Strategy, Scenario Planning may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Weighted SWOT Analysis of Using Scenario Planning to Reshape Strategy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Using Scenario Planning to Reshape Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Using Scenario Planning to Reshape Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Using Scenario Planning to Reshape Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Using Scenario Planning to Reshape Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Scenario Planning needs to make to build a sustainable competitive advantage.
