Dealing with the uncertainties of environmental change by adding scenario planning to the strategy reformulation equation

Abstract

Purpose

This paper serves to discuss the benefit of applying scenario‐planning techniques to more traditional approaches to strategy development in helping firms deal with uncertainty and evolutionary change in their surrounding environment. Assessing this environment provides insight into the unique changes, the implications these changes have on a firm's strategies, and the creation of special techniques required to understand them. One of these special techniques is scenario planning. Any study of the relationship between strategy, environment and performance must include variables that involve business scope and resource commitments.

Design/methodology/approach

A review of the research literature on the use and benefits of both the traditional approaches and the scenario approach to constructing the future strategy of a firm in a changing environment is undertaken.

Findings

The results suggest that a better understanding of the performance of firms within a changed environment can be achieved using the combination of a PESTEL analysis, internal resource analysis and the use of scenarios. This reformulation equation creates a model of a possible environment in which the firm must operate and an investigation of the strategic implications of various scenarios to the firm.

Originality/value

This paper is unique in that it marries the traditional approaches to strategy development with the application of scenario planning. It is of benefit to managers and strategic planners by illustrating how a firm may better develop insight into how it should formulate and implement its strategy in order to retain or create a competitive advantage in the changed environment in which it operates.

Citation

Walsh, P.R. (2005), "Dealing with the uncertainties of environmental change by adding scenario planning to the strategy reformulation equation", Management Decision, Vol. 43 No. 1, pp. 113-122. https://doi.org/10.1108/00251740510572524