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Decision making under extreme uncertainty: blending quantitative modeling and scenario planning

Decision making under extreme uncertainty: blending quantitative modeling and scenario planning Purpose – This disguised case aims to describe a scenario planning project to improve decision making for a manufacturer operating in Brazil's confusing, unpredictable politico‐economic environment. “BrasilAuto's” management team faced a range of complex choices related to capacity, vehicle mix, pricing, distribution, dealer relationships, exports, labor and government relations. Design/methodology/approach – The consultants used a combination of scenario planning and quantitative analysis to answer the company's two key questions: where is the country headed and how many vehicles can we expect to sell, looking across a range of business environments? Findings – As a result of the scenario exercise, company execs had a better idea of what to watch for in the political sphere and how to anticipate the actual market impact of changing economic policy options. Having looked at the range of plausible business environments hard and carefully, their uncertainty was significantly less unsettling or paralyzing than it had been. Practical implications – The consultants discuss the lessons learned – for the client and for improving the process. Originality/value – It's rare to have an insider's view of a scenario process that attempts to produce both quantitative and qualitative insights into a range of distinctly different political/economic futures and their impact on an industry. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategy & Leadership Emerald Publishing

Decision making under extreme uncertainty: blending quantitative modeling and scenario planning

Strategy & Leadership , Volume 41 (4): 7 – Jun 28, 2013

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
1087-8572
DOI
10.1108/SL-04-2013-0025
Publisher site
See Article on Publisher Site

Abstract

Purpose – This disguised case aims to describe a scenario planning project to improve decision making for a manufacturer operating in Brazil's confusing, unpredictable politico‐economic environment. “BrasilAuto's” management team faced a range of complex choices related to capacity, vehicle mix, pricing, distribution, dealer relationships, exports, labor and government relations. Design/methodology/approach – The consultants used a combination of scenario planning and quantitative analysis to answer the company's two key questions: where is the country headed and how many vehicles can we expect to sell, looking across a range of business environments? Findings – As a result of the scenario exercise, company execs had a better idea of what to watch for in the political sphere and how to anticipate the actual market impact of changing economic policy options. Having looked at the range of plausible business environments hard and carefully, their uncertainty was significantly less unsettling or paralyzing than it had been. Practical implications – The consultants discuss the lessons learned – for the client and for improving the process. Originality/value – It's rare to have an insider's view of a scenario process that attempts to produce both quantitative and qualitative insights into a range of distinctly different political/economic futures and their impact on an industry.

Journal

Strategy & LeadershipEmerald Publishing

Published: Jun 28, 2013

Keywords: Strategic management; Scenario planning; Economic scenarios; Quantitative analysis; Political scenarios; Brazilian auto industry; Economic models; Brazil scenarios; Quantitative methods; Brazil; Automotive industry

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