In this paper, we use scenario planning as a strategic management tool to be used in the proactive and predictive identification as well as mitigation of risks associated with the U.S.A's food supply chain as well as the operations of USDA.THis is done in line with the following instructions: Find and read the following two articles: i) Wack, P. (1985) 'Scenarios: uncharted waters ahead', Harvard Business Review, September-October: 73-89. ii) Wack, P. (1985) 'Scenarios �" shooting up the rapids', Harvard Business Review, November-December: 139-150. 2) Now select an organisation with which you are familiar. Develop three future scenarios, and strategic responses, for the organisation. The first of these scenarios should predict 'no major future changes' in the external environment. Scenario 2 should be based on a prediction of 'negative future changes' in the external environment. Scenario 3 should be based on a prediction of 'positive future changes' in the external environment (60 marks). 3) Critically evaluate the contribution that scenario planning can make to effective strategic management. Draw on relevant theories and examples to support your arguments (40 marks).Find and read the following two articles: i) Wack, P. (1985) 'Scenarios: uncharted waters ahead', Harvard Business Review, September-October: 73-89. ii) Wack, P. (1985) 'Scenarios �" shooting up the rapids', Harvard Business Review, November-December: 139-150. 2) Now select an organisation with which you are familiar. Develop three future scenarios, and strategic responses, for the organisation. The first of these scenarios should predict 'no major future changes' in the external environment. Scenario 2 should be based on a prediction of 'negative future changes' in the external environment. Scenario 3 should be based on a prediction of 'positive future changes' in the external environment (60 marks). 3) Critically evaluate the contribution that scenario planning can make to effective strategic management. Draw on relevant theories and examples to support your arguments (40 marks).
¶ … Planning: USDA's focus on its future strategies
The concept of risk
Scenario 1:'no major future changes' in the external environment.
Scenario 2: 'negative future changes' in the external environment
Scenario 3: 'positive future changes' in the external environment
Critically evaluate the contribution that scenario planning can make to effective strategic management. Draw on relevant theories and examples to support your arguments.
The concepts of scenarios and scenario planning
Vision-Driven scenarios and its application in strategic planning
Decision Driven Scenarios
The stickiness of information
In this paper, we use scenario planning as a strategic management tool to be used in the proactive and predictive identification as well as mitigation of risks associated with the U.S.A.'s food supply chain as well as the operations of USDA.
Introduction
Food security forms a critical element of any successful nation. Hamm and Bellow (2003) defined community food security as a condition in which all members of the community are in a position to obtain a safe and yet culturally dependable amount of nutritionally adequate diet via a sustainable food system that optimizes the level of community self-reliance, democratic decision as well as social justice. Community food security is therefore a critical component in the ensuring that the necessary conditions are put in place in order to enable members of a community and of a given nation to enjoy a healthy living. The threats to a nation's food security are often drastic as evidenced internationally by the high level of perpetual malnutrition by the Sudanese children as noted by Gettleman (2007) as well as domestically by about 56% of the Houston Astrodome shelter residents who were exposed to lack of sufficient food after their homes were ravaged by Hurricane Katrina back in 2005 as noted by Brodie, Weltzien, Altman, Blendon & Benson (2006). Food availability can therefore dictate whether a nation dies or thrives. It therefore becomes a matter of national as well as global importance. The United States Department of Agriculture is the one mandated with ensuring food security in the entire U.S.A. In this paper, we explore how scenario planning can be used by USDA in ensuring that it is prepared to tackle any situation/threat to the national food security. In this paper, we use scenario planning as a strategic management tool to be used in the proactive and predictive identification as well as mitigation of risks associated with the U.S.A.'s food supply chain as well as the operations of USDA.
The concept of risk
Risk is defined by the Royal Society (1992) as the probability that a particular negative event takes place during a stated period of time as a result of a given challenge.
Scenario 1:'no major future changes' in the external environment.
The external environment of the United States of America's food supply chain is defined by the level of imports emanating from other countries. A situation of 'no major future changes' in the external environment would therefore be defined by normalcy within the entire food supply and value chain system. The food supply chain is represented in figure 1 below;
Figure 1: The food supply chain (Deep & Dani,2009).
Scenario 2: 'negative future changes' in the external environment
The existence of 'negative future changes' in the external environment' signifies the existence of actual risks within the external environment of the U.S. food supply chain. Fearne, Hornibrook et al. (2001) noted that despite several food safety legislations, the escalating levels of customer concerns as well as the resulting costs that are imposed on the society due to the numerous food safety as well as security scares have resulted to an increase in the attention to the causes, the effects as well as prevention of the possible hazards. The work of Peck (2006) in which she discussed the reliance of business sector on the larger food sector indicated a very wide gap in the level of preparedness for the BMC (business continuity management) because very few corporations have adopted a preventative or proactive approach to the crisis management and are instead operating in a reactive mode. She indicated that the quest for efficiency coupled with the just-in-time philosophy within the food industry had only served in progressively reducing the levels of stock throughout the U.S. food supply chain. On the contrary, the consolidation of the distribution networks by the main food manufacturers as well as the general trend towards the adoption and implementation of a supply chain system via the 3PL (Third Party Logistics) providers, coupled with the reduction in the distribution sites implies that the general loss of site as a result of natural disasters like flood and fire can cause a serious interruption of the supply chain.
Kliendorfer and Saad (2005) classified supply chain risks into two main categories.Those that arise from problems of coordinating the supply and demand parameters as well as those that arise from the disruption to the normal supply chain activities. The work of Christopher and Peck (2003) however categorized these supply chain risks into five main categories namely;
1. Risks that are internal to the firm such as; process and control
2. Risks that are external to the firm but that are however internal to the overall supply network such as demand and supply risks.
3. Risks that are external to the network such as environmental risks
According to Peck (2003), the risks that affect the food supply chain includes the following;
1. Product contamination as well as recall
2. Loss of access to products due to terrorism
3. Loss of access to products due to protesters
4. Loss of site
5. A reduction in capacity
6. Loss of individuals/manpower
7. Loss of a supplier
8. Dual sourcing
9. Contractual cover
10. Market forces.
Scenario 3: 'positive future changes' in the external environment
The third scenario entails the 'positive future changes' in the external environment and involves the positive forecast of the attributes that affects the food supply chain. The factors that might bring such kind of a scenario are;
1. Pack of any form of product contamination as well as recall
2. Existence of access to products due to terrorism
3. Existence of access to products due to protesters
4. Existence of conducive site
5. An increase in capacity
6. Existence of individuals/manpower
7. Existence of several suppliers
8. Existence of Contractual cover
9. Positive Market forces.
Critically evaluate the contribution that scenario planning can make to effective strategic management. Draw on relevant theories and examples to support your arguments.
Scenario planning is noted by Ringland (1998) to be that important part of strategic planning that effectively relates to the tools as well as technologies used in the management of uncertainties of a company's future. The concept of scenario planning has according to Courtney (2003) focused on the rather long-term strategic issues. Quite a large number of companies have successfully employed scenario planning in the exploration and investigation of plausible future environment engagements/environments.
These firms have however achieved their success via scenario planning only at the macro level. This is to say that scenario planning has over the years been considered as a tool for the provision of a means for effectively considering various/multiple futures in accordance to the prevailing socioeconomic, technological as well as political changes. It has therefore been suggested that the several instances of failure of scenario planning process have mainly involved situations as well as issues in which the main problems were somehow more defined (specific) while also involving a rather shorter time frame as noted by Courtney (2003).
There are several kinds of scenarios. However, in this paper, we limit our discussion to the decision-driven and vision-driven scenarios as proposed in the work of Courtney (2003). We however extend this discussion to involve the three levels of performance as proposed by Rummler and Brache (1995).
The argument of course is based on the general consensus that the vision-driven scenarios are best suited for issues occurring at the organizational level while the decision-driven scenarios are best suited for decision and process level issues.
Scenario planning is noted by Ringland (1998) to be that important part of strategic planning that effectively relates to the tools as well as technologies used in the management of uncertainties of a company's future. The concept of scenario planning has according to Courtney (2003) focused on the rather long-term strategic issues. Quite a large number of companies have successfully employed scenario planning in the exploration and investigation of plausible future environment engagements/environments.
These firms have however achieved their success via scenario planning only at the macro level. This is to say that scenario planning has over the years been considered as a tool for the provision of a means for effectively considering various/multiple futures in accordance to the prevailing socioeconomic, technological as well as political changes. It has therefore been suggested that the several instances of failure of scenario planning process have mainly involved situations as well as issues in which the main problems were somehow more defined (specific) while also involving a rather shorter time frame as noted by Courtney (2003).
There are several kinds of scenarios. However, in this paper, we limit our discussion to the decision-driven and vision-driven scenarios as proposed in the work of Courtney (2003). We however extend this discussion to involve the three levels of performance as proposed by Rummler and Brache (1995).
The argument of course is based on the general consensus that the vision-driven scenarios are best suited for issues occurring at the organizational level while the decision-driven scenarios are best suited for decision and process level issues.
The concepts of scenarios and scenario planning
Several definitions exist of the terms scenarios and scenario planning. According to Porter (1985) "A scenario is an internally consistent view of what the future might turn out to be -- not a forecast, but one possible future outcome" (p.63) while Schwartz, (1991, p. 45) noted that a scenario is a tool used for the ordering of one's perceptions regarding an alternative future environments within which one's decisions might as well be played out. Scenario planning on the other hand was defined by Ringland (1998, p. 83) as the part of strategic planning that relates to the various tools as well as technologies that are used in the management of the future uncertainties. Schoemaker (1995, p. 13) on the other hand defined scenario planning as a form of a disciplined methodology that is used for effectively imagining the various possible futures in which a given organizational decisions may as well be played out.
The main outputs of any scenario planning are present in the definition that was provided by Chermack's (2005) that suggests that scenario planning should contain plausible alternative views/stories regarding the future, altered mental models, learning, organizational dialogues and improvised performance which is derived from the making of better decisions.
These outcomes are noted to be a synthesis of several different definitions of the concept of scenario planning.
While investigating the importance of scenario planning to strategic management practices, it is critical to note that there exists a big difference between the concept of scenario planning and that of scenario building. For the sake of our discussion, it is important to note that scenario planning is regarded as the overarching process of producing multiple plausible alternatives of the future environment and then effectively using these environments for the development of organizational strategy.
Vision-Driven scenarios and its application in strategic planning
Vision driven scenarios are employed in the identification of the relevant assumptions at a firm's macro environment. This implies that a lot of time must be spent in the analysis of the trends as well as forces that affect the macro environment. The forces that are normally considered for this process are the STEEP (Social, Technological, Environmental, Economic, and Political) forces. This is then coupled with insights that are gathered from in-depth interviews with the company's top executives, managers as well as organizational members. In order to differentiate between decision-driven scenarios and vision-driven ones, it is worth mentioning the work of Courtney (2003) who argued that the process of scenario planning is usually employed at the macro level in situations where innovative thinking on various unpredictable forces are necessary. The concept of vision-driven scenarios was further noted by Courtney (2003, p.14) to help managers and the executives to think outside the box as well as effectively question their own assumptions regarding the future.
Decision Driven Scenarios
The vision-driven scenarios on the other hand are noted to lack any specific direction or even commitment to any near-term strategic objectives/decisions. They are therefore often used for informing a well-specified strategic decision or choice. This choice is what is considered in a situation where the 'better' option is not easy to arrive at due to uncertainty over the exact impact of that specific choice.
The decision driven scenarios are usually employed in addressing of more specific issues like new product launches as well as in the case of deciding whether or not one should construct a new plant as noted by Courtney (2003). He argued that the application of broad vision driven scenarios are never appropriate in cases where one has to make several near-term decisions. The implication is that should one use this tool then failure is eminent.
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