ACCA Strategic Professional · Strategic Business Leader · Environmental issues

Tamsin Foods has developed three scenarios for its agricultural supply chain. Strategy A earns acceptable returns in all three. Strategy B earns outstanding returns in one scenario but heavy losses in another. The directors are risk-averse and cannot assign reliable probabilities to the scenarios. Which conclusion best fits scenario-planning logic?

Strategy A is the better fit because it performs acceptably in every scenario, which matters when probabilities are unreliable and directors are risk-averse. Management can keep flexibility to add elements of Strategy B if early signals show a favourable scenario emerging.

1. AChoose Strategy B, because the best-case outcome dominates
2. BChoose Strategy A as the robust option, perhaps keeping options open to add elements of B as signals emergeCorrect
3. CReject both, because scenarios cannot inform strategy choice
4. DCalculate expected values using equal probabilities and choose the highest regardless of loss