Recently I have seen a phrase mentioned by a couple of different Fortune 500 firms during conference calls. While discussing their financial results, they have mentioned that they are "focusing on things that they can control."
When I first heard this phrase it struck me as odd. I inferred from the phrase that they were trying to convey diligence with regard to managing in an uncertain environment.
However, in our current period of economic weakness, effective management during uncertainty and "uncontrollable" circumstances, is paramount. While no one says it is easy or straightforward, my analysis indicates it will be imperative, especially if there is further economic deterioration, as I believe will unfortunately occur.
As we have seen, this period of economic weakness has held plenty of unforeseen events and surprises. As I mentioned in here:
http://sites.google.com/site/prosperitybypen/you/business
there is a lot on the plate here with regard to managing a business in our "new (economic) environment." Perhaps the biggest mistake will be to underestimate the complexity.
I will be discussing more of this issue soon...
SPX at 944.38 as this post is written...
Showing posts with label business planning. Show all posts
Showing posts with label business planning. Show all posts
Monday, July 20, 2009
Tuesday, July 7, 2009
The Importance of Scenario Planning to Businesses
The Wall Street Journal ran a story yesterday titled, "Pendulum is Swinging Back on 'Scenario Planning." Perhaps most interesting is the history of scenario planning.
As I have written about previously in the June 18 post, those who own or manage a business will likely continue to find themselves in a very challenging economic and business environment. As I've discussed in this article, there are quite a few things that businesses can do to mitigate and/or avoid the potential damage this economic weakness can cause.
Of course, it is unwise to generalize advice for all businesses, especially in an economic environment like that we currently have. However, scenario planning (and the associated modeling) can be a very valuable tool in helping businesses understand their specific situation (options, vulnerabilities, opportunities, etc) over a range of economic scenarios. It is paramount in effective business planning.
At this point, based upon the statistics I have seen, it would appear as if businesses in general are underutilizing scenario planning. I think this is very unfortunate, as it exposes businesses to risks and uncertainty that may be avoidable.
Should this economy continue to deteriorate, as I have discussed extensively on this blog, businesses could face a very difficult and tricky environment that may well be unpredictable. In such an unpredictable environment, scenario planning increases in value.
SPX at 892.56 as this post is written
Copyright 2009 by Ted Kavadas
As I have written about previously in the June 18 post, those who own or manage a business will likely continue to find themselves in a very challenging economic and business environment. As I've discussed in this article, there are quite a few things that businesses can do to mitigate and/or avoid the potential damage this economic weakness can cause.
Of course, it is unwise to generalize advice for all businesses, especially in an economic environment like that we currently have. However, scenario planning (and the associated modeling) can be a very valuable tool in helping businesses understand their specific situation (options, vulnerabilities, opportunities, etc) over a range of economic scenarios. It is paramount in effective business planning.
At this point, based upon the statistics I have seen, it would appear as if businesses in general are underutilizing scenario planning. I think this is very unfortunate, as it exposes businesses to risks and uncertainty that may be avoidable.
Should this economy continue to deteriorate, as I have discussed extensively on this blog, businesses could face a very difficult and tricky environment that may well be unpredictable. In such an unpredictable environment, scenario planning increases in value.
SPX at 892.56 as this post is written
Copyright 2009 by Ted Kavadas
Subscribe to:
Posts (Atom)