Mission and vision – scenario testing

How do our fundamentals hold under alternative futures?

Story category: Mission, vision & value

Story tags: Mission, vision & value Scenario planning

As part of our annual cycle we test our strategy fundamentals in order to see if and where we have to make adjustments.

 

2020 and 2021 have proven that uncertainties and unknowns have the ability to fundamentally impact operations. One of the things that was recently done, to see if the fundamentals of our strategy are fit for the future, we have developed a set of scenario’s. The idea behind the scenario’s is not to ask what will happen to us or predict or forecast what will happen. The idea is to create a set of possible futures by looking at factors that are uncertain but have the ability to impact our industry and operations; based on these plausible futures we test if our current setup is able to provide successful outcomes if those scenarios were to unfold.

 

We have looked at two different factors:

 

Economic development; will inflation increase?

 

Market consolidation; will the demand side consolidate or scatter?

 

Scenario 1

 

Absolute decrease in demand/Absolute decrease in variability

In this scenario there is a high degree of consolidation but an absolute decline in orders: The decline at our company is presumably lower than the average market due to resourcing in Vietnam.
This means that there is a decreased volume of low variability orders.
This means decreasing capacity, decreasing complexity and a focus on value (cost is assumed to be taken care of by moderately achieved economies of scale).

 

 

 

Scenario 2

 

Absolute decrease in demand/Absolute increase in variability

In this scenario there is a low  degree of consolidation but an absolute decline in orders: The decline at our company is presumably lower than the average market due to resourcing in Vietnam.
This means that there is a low volume of low quantity highly variable orders.
This means decreasing capacity, increasing complexity, and a focus on cost (no ability to achieve economies of scale due to fragmentation of demand).

 

Scenario 3

 

Absolute increase in demand/Absolute increase in variability

In this scenario there is low degree of consolidation and a high degree of growth:
This leads to a lot of smaller players that create a more tailored demand.
This means that there is a lager volume of low quantity highly variable orders.
This means increasing capacity, increasing complexity and a focus on value.

 

Scenario 4

 

Absolute increase in demand/Absolute decrease in variability

In this scenario there is a high degree of consolidation and a high degree of growth:
This leads to a few big players that have a standardized portfolio of products.
This means that there is a lager volume of high quantity low variability orders.
This means increasing capacity, decreasing complexity, and a focus on value produced in mass quantities.

 

Each of these scenario’s has been used to test the current strategy, mission, and vision. The next steps that are taken is to see where there are opportunities or threats that have to be addressed.

 

One of the great benefits of scenario’s is that it does not forecast what will happen, as predictions are always wrong. What scenario’s do is create alternative futures which we can use to see where we have to act now in order to prevent unbearable outcomes from disrupting future successes. Another benefit is that attention and perception are influenced by experience and expectation, and scenarios help to create memories of the future that help with easily recognizing when scenarios unfold, so that management can take adequate action.

Copyright © 2020 ONP-Vietnam. All rights reserved.
SMS
Map