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ACCA Strategic Professional · Strategic Business Leader · Environmental issues

Halden Retail operates in a stable, slow-changing market with few competitors and predictable demand. A consultant recommends building detailed multi-scenario plans for every product line. Which is the most valid criticism of this recommendation?

The valid criticism is that scenario planning suits highly uncertain, complex environments. In a stable, predictable market conventional forecasting is adequate, so building detailed multiple scenarios for every product line would be disproportionate in cost and effort.

  1. AScenario planning is mainly suited to environments with high uncertainty and complexity, so the effort may be disproportionate hereCorrect
  2. BScenario planning cannot be used by commercial organisations
  3. CScenarios must always be assigned precise probabilities, which is impossible in stable markets
  4. DScenario planning only addresses internal weaknesses, not the external environment

Explanation

Scenario planning is most valuable where uncertainty is high and the future may differ sharply from the past. In a stable, predictable market, conventional forecasting is adequate and the cost is hard to justify. Scenarios are not normally given precise probabilities, so the third option is wrong.

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