What Is Scenario Analysis?

Scenario analysis method, also called script method or foreground description method, is a method of making predictions on the possible situation or the consequences of the predicted object on the premise that a certain phenomenon or a certain trend will continue into the future. It is usually used to make various assumptions or predictions about the future development of the predicted object, and it is an intuitive qualitative prediction method. ^[1]

The word "scenario" first appeared in 1967

Analyze the environment and shape decisions

If any enterprise wants to survive and grow, it must do its best to "know oneself, one another, and one environment". The scenario analysis method is that the company evaluates and analyzes the core competitiveness of itself and its competitors through a comprehensive analysis of the entire industry environment and even the social environment, and then makes corresponding decisions. Because each group of descriptions of the environment will eventually produce a corresponding decision, scenario analysis is mainly used in analyzing the environment and forming decisions.

Improve the strategic adaptability of the organization

Since the scenario analysis method focuses on future changes, it can help companies deal with uncertainties in the future. Especially in the aspect of strategic early warning, it can improve the strategic adaptability of enterprises or organizations. At the same time, the company's continuous scenario analysis can also provide a large number of environmental market parameters for the enterprise intelligence department, and these parameters can help the company in various aspects, such as helping companies to discover their opportunities, threats, advantages and disadvantages.

Improve the overall ability of the team and optimize the allocation of resources

Starting from the inside of an enterprise, the core of an enterprise is people, and human thought is the key. Since scenario analysis is not just about

1: Think that there are many possible trends for future development, so the prediction results are also diverse;

2: Pay attention to understanding the internal environment, focus on the analysis of the key factors that play an important role in the development of the system and the coordination and consistency;

3: Subjective imagination is needed, emphasizing the role of decision makers' subjective wishes in future analysis;

4: Combining quantitative analysis with qualitative analysis, a lot of

Identification of the theme

Clarify the purpose and main tasks of the scenario analysis, including its time frame, specific objects,

Scenario analysis methods are mainly applied to the following aspects abroad:

1. Future research and forecast. Such as

1. The analysis of the environment in the "scenario analysis" can use a variety of analysis tools, such as

(1) PEST analysis:

Political, economical, social, technological

Economic: factor markets and supply levels; labor markets; price levels; fiscal and tax policies; customer factors; capital markets: interest rates, exchange rates and financing; WTO;

Political: political environment; legal environment; government regulation; industrial policy;

Technical: technological change; technological replacement;

Social: social attitudes, beliefs, and values; age structure and education of the population; greening;

(2) Daus matrix based on SWOT analysis:

Strength, Weakness, Opportunity, Threat

(3) Analysis of stakeholder relevance: who are the relevant stakeholder groups? What interests do they have? What are the trends in these benefits and needs?

2. The starting point for scenario analysis is important.

The scenario analysis method is to improve the adaptability and development ability of the enterprise, the public sector or other organizations to the future. Therefore, a premise of the analysis is to have a clear understanding of the object of analysis. For example, for a company, the first thing to understand is the company's strategic goals, organizational positioning, and vision. There is also an easily overlooked but very important factor is the culture of the organization, which is related to the individual values and collective identity of each organization . If you do not understand these, from a holistic perspective, it is likely that a seemingly good strategy obtained through scenario analysis will become impractical, or the effect may not be good.