Abstract:
Scenario planning, an alternative strategic management tool, has given a new meaning and dimension to the way strategy should be thought, discussed and implemented in organizations. This paper introduces scenario planning in the way the turbulent world should be better managed by looking for possible futures and not predicting the only future. No matter how rational strategic planners are, the complexity of the business environment would still leave the planners guessing of their planned and predicted future. This study undertaken using scenario planning technique by looking at the future of the small travel business in Malaysia. The three plausible scenarios discovered were 'stormy weather', 'blizzards' and 'occasional shower'. The study recommended that strategic options available for the businesses were 'differentiation', 'new services', 'diversification and mergers/acquisition'. These options are applicable for all scenarios.
Keywords: Scenario planning, strategic management, entrepreneurship, small travel industry, management imperfection, evolutionist, revolutionist
INTRODUCTION
In recent times, change has become an ultimate issue for organizational survival. To keep abreast with the latest in products, designs and innovations of competitors and incorporating a copycat strategy is not the recipe for long-term success. Only organizations that have the ability to scan the environment effectively with a shared mental model, leading to innovation within can see success and profit potential in the long run. This is the field of strategic management and scenario planning, an alternative tool to strategic management, ensures long-term sustainable survival of an organization. Many strategic planners have found scenario planning as crucial part of strategic management for envisioning the future by producing plausible multiple futures (scenarios) (Van der Heijden, 1996).
A failure to envision seeing the micro and macro environment of an organization has by and large been the root cause for ineffective strategic planning. The three main reasons that have been identified to blind the organizations are:
Operational ineffectiveness: Operational ineffectiveness is one of the causes for low profitability in organizations. Companies that are able to get more out of their inputs, by way of eliminating waste, employing advanced technology, and motivating employees, stand to have higher profitability than competitors because they are able to reduce operating costs. However, not all efficiency models and theories need to be employed and organizations have a choice on their preference. For example, 'zero-defect' can be introduced as a Total Quality Management principle because it leads to efficiency and overall lower expenditure in costs, but then again it is one that a company can live without.
It must be emphasized that although operational ineffectiveness is one of the contributors for failures in organizational processes, it does not, however, drive a company out of competition, at least in the short term. There is a false assumption in organizations that operational activities are a part of strategy. It is certainly an essential element in organizations but however, its ineffectiveness is not the root cause for organizational failures.
Business Successes: Strategic management rethink is more in need for successful companies than those who are struggling. Successful companies are in danger of suffering from strategic failure in times of rapid change (Wack, 1985). Because of their success story they will be locked into strong assumptions and therefore their procedures and policies will be hard to change. In other words, change is not in the agenda. For an instance, IBM, the dominant in the mainframe computer market, failed to envision the growing market for personal computers (Kay, 2001). However, the fact remained that they were the best in mainframe computing. …
just copy and paste..more information ----> http://www.questia.com/library/journal/1P3-1940617901/scenario-planning-approach-to-strategic-management
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