SPP Scenario Planning & Forecasting 4 — Questions and Answers
Question 1: Which approach is most appropriate for forecasting in highly volatile, rapidly changing markets with limited historical data?
- Linear regression extrapolation
- Analogical forecasting using similar past markets (Correct answer)
- Long-range econometric models
- Five-year moving average
Correct answer: Analogical forecasting using similar past markets
Analogical forecasting draws on comparable historical markets or technologies to inform projections when direct data is scarce.
Question 2: In a scenario planning workshop, 'driving forces' are best defined as:
- Internal KPIs the organization controls directly
- External STEEP factors that shape the future environment (Correct answer)
- Competitive actions taken by market leaders
- Financial metrics used to evaluate scenario outcomes
Correct answer: External STEEP factors that shape the future environment
Driving forces are external Social, Technological, Economic, Environmental, and Political factors that influence how the future unfolds.
Question 3: A strategic plan developed using 'scenario-based planning' differs from traditional long-range planning primarily because it:
- Relies only on a single most-likely forecast
- Prepares the organization for multiple possible futures (Correct answer)
- Focuses entirely on short-term operational goals
- Eliminates the need for SWOT analysis
Correct answer: Prepares the organization for multiple possible futures
Scenario-based planning deliberately develops strategies that account for several plausible futures rather than betting on one forecast.
Question 4: Which tool is used to systematically map relationships between variables to identify feedback loops in a system?
- Porter's Five Forces
- Causal loop diagram (Correct answer)
- BCG growth-share matrix
- Ansoff matrix
Correct answer: Causal loop diagram
Causal loop diagrams visualize how variables influence each other through reinforcing and balancing feedback loops.
Question 5: When a scenario planning team uses 'backcasting,' they are:
- Reviewing the accuracy of previous forecasts
- Starting from a desired future and working backward to identify required actions (Correct answer)
- Extrapolating past trends into the future
- Evaluating competitor scenarios retrospectively
Correct answer: Starting from a desired future and working backward to identify required actions
Backcasting defines a preferred future endpoint and then identifies the policy and strategy steps needed to reach it.
Question 6: The 'predetermined element' in Shell's scenario planning methodology refers to factors that:
- Cannot be influenced but are highly certain to occur (Correct answer)
- Are uncertain and will determine which scenario unfolds
- Are entirely within organizational control
- Represent the worst-case environmental conditions
Correct answer: Cannot be influenced but are highly certain to occur
Predetermined elements are forces that are virtually certain to happen regardless of which scenario materializes, such as demographic trends.
Question 7: An organization running a 'pre-mortem' analysis on its strategic plan is attempting to:
- Celebrate past strategic successes before a new cycle begins
- Prospectively identify reasons why the strategy might fail (Correct answer)
- Assess competitors' strategic weaknesses
- Archive outdated scenarios for future reference
Correct answer: Prospectively identify reasons why the strategy might fail
A pre-mortem imagines the strategy has already failed and works backward to surface risks and blind spots before execution.
SPP Scenario Planning & Forecasting 4
Which approach is most appropriate for forecasting in highly volatile, rapidly changing markets with limited historical data?