Scenario Planning Tool

Scenario Planning is being researched as a potential tool to assist decision makers in being prepared for upcoming events. A scenario is a story of what might happen; possible elements are world trade, oil/commodity prices, political/economic stability, productivity.

The following highlights what we are looking at in scenarios. Click here for acronyms.

- Get away from point forecasts, we know they are wrong anyway; the future cannot be accurately predicted.
- Scenarios can be used to assist decision makers to consider a wide range of possibilities.
- State of practice: 2 years lag in recognizing change in conditions, another year or more to react.

The scenario will give percent change in the overall industry,
the WSA will give history of industry product-model sales,
the Cat history data gives details on Cat sales, and putting
this together, we predict the per-product-model percent change
in 200 Cat product-models -- this sales volume prediction can be
fed into the financial model; part of the formula:
(PINS = Percent INdustry Share)

Each scenario should be provided with explanations of what would be necessary for each story to come true

The stories should be in terms of the key factors of the business
(e.g. commodity prices, political/economic stability, world trade, productivity)
Signposts are defined to help managers see what scenario is unfolding,
reducing the recognition lag
Managers predefine plans for each scenario to reduce reaction lag