The use of scenario planning for managing environmental uncertainty.

Abstract

There were two main objectives for this research. The first objective was to understand how organisations think strategically and formulate strategy for the current and future environments in which they operate, and the second objective was to determine what the organisations were doing to manage complexity and uncertainty in these environments. This necessitated a review of "traditional" or "rationalist" strategy, the "resource based view" of strategy, and if and how organisations use scenario planning as a means to reduce environmental uncertainty, develop strategic options, improve the quality of strategic decisions, and facilitate organisational learning. The methodology followed for the research was qualitative in nature and involved a literature review and three case studies of organisations in two industries. Primary data was acquired from semi structured interviews and workshops, and secondary data came from annual reports, analysts reports, books, journals and periodicals, and documents made available by the subjects of the study. The workshops were also used to confirm the veracity of data and explore emerging information, themes and concepts. The research led to the development of a framework for the analysis of strategy formulation in organisations, and it surfaced three predominant themes: 1. The strategy process and strategic response of organisations will develop in accordance with its market dynamics and environmental drivers. The primary drivers shaping the strategy process and strategic response is the nature of demand in the market and the market context. Secondary drivers are the political, economic, social, technological and regulatory environments. 2. The market context is determined by the industry structure, which can be monopolistic, oligopolistic or open and competitive, and the profile and characteristics of the competition. 3. There are three organisational determinants of the strategic response: the political and cultural systems metaphors, the mental models that develop as a result of these systems, and the type and nature of individual and organisational leaming.