What is the basic scenario?
The basic scenario concerns a set of basic prerequisites, which are expected to lead to the most realistic result of a number of events. It allows the analyst to construct variant scenarios by changing the key variables to determine the deviation between the variant result and the result of the basic scenario. This type of scenario development is a decision -making tool used in planning business planning, market forecast and other types of situations where a major strategic decision needs to be made.
It is virtually impossible to know what will happen in the future. Managers must decide on the basis of the information they have in their hand and their expert opinions on what will most likely happen in the future. The process of deciding on the procedure that will have a future result includes entry from different people who must be considered and synthesized to determine the course that will meet with the greatest success.
input that goes into the decision -making process includes estimates andprerequisites. For example, if the decision on the production level depends on the future price of oil, the only way to include this information in the analysis is to look at the historical price of oil and make future prices on the basis of certain market assumptions. There is no reliable way to find out how much oil will cost in 24 months, so any changes in production that the company now performs, which is based on this variable, have a certain degree of risk.
management uses planning the basic scenario to work through possible results from changes in key variables. The basic scenario is what the analyst feels that it is the most likely result based on history and knowledge; This includes estimates and assumptions, but these inputs are added to the scenario at their most likely level. Once the basic scenario is set, analysts construct variantyrios that examine possible results if the key variable changes.
This type of analysis uIt allows leaders to prepare the best and worst cases for scenarios. No business wants to be caught by the area if the market suddenly changes or the critical entry becomes unavailable from the ordinary supplier. Scenario planning keeps flexible businesses. This type of decision -making process allows executives to create backup plans, so the company knows what to do if things change.
One of the most common uses of planning basic scenarios is when new owners create a business plan to find start financing. Investors usually expect the owner to submit financial statements that reflect the most likely financial scenario for the company in the first few years and present scenarios of the worst and best case that reflect changes in the ownership of the owner's basic assumptions. These investors usually want to know that the owner has a plan if something substantial change.