Final answer:
company leaders can use scenario planning to prepare for future events by developing optimistic and pessimistic scenarios, which can guide strategic decision-making and help the business navigate intense competition or scrutiny.
Step-by-step explanation:
When a company is undergoing intense competition or scrutiny, scenario planning is a strategic tool that its leaders can use to prepare for future events. This involves developing coherent and credible stories about the future, based on factors such as environmental shifts, market changes, and competitor behavior. For a company in this situation, scenario planning can help anticipate possible outcomes and formulate strategies to navigate them.
To plan out one optimistic and one pessimistic scenario for the company:
- Optimistic outcome: The company successfully innovates, leading to a new product that captures market share and enhances profitability. They expand into new markets, creating more jobs and receiving positive media coverage.
- Pessimistic outcome: The company fails to innovate or adapt, losing market share to competitors. This leads to downsizing, public relations issues, and potential bankruptcy.
Scenario planning in these situations not only prepares the company for these potential futures but also helps them become more agile and adaptable in the face of uncertainty.