SPP Scenario Planning & Forecasting 5

Question 1

Which element distinguishes a 'stretch scenario' from a baseline scenario?

Accepted Answer

It pushes assumptions beyond comfortable norms to challenge strategic thinking

Answer

Stretch scenarios deliberately adopt extreme but plausible assumptions to stress-test strategic thinking beyond familiar comfort zones.

Question 2

In the context of SPP, 'horizon scanning' primarily serves to:

Accepted Answer

Detect early signals of emerging trends and potential discontinuities

Answer

Horizon scanning systematically monitors the environment for weak signals and emerging issues before they become mainstream.

Question 3

When two scenarios share the same axis value (e.g., both assume high economic growth), a scenario planning team should:

Accepted Answer

Revise the axes because the scenarios are not sufficiently distinct

Answer

Scenarios must differ meaningfully on both axes; identical axis values indicate the driving forces were not properly differentiated.

Question 4

A company identifies that its current strategy is only viable in one of four scenarios. The appropriate strategic response is to:

Accepted Answer

Develop options or hedges that reduce single-scenario dependency

Answer

Over-reliance on a single scenario is a strategic vulnerability; options, hedges, and real options reduce that concentration risk.

Question 5

Which forecasting error occurs when an analyst gives excessive weight to recent events when predicting future trends?

Accepted Answer

Recency bias

Answer

Recency bias causes analysts to over-index on the most recent data points, distorting longer-term trend assessments.

(SPP) Strategic Planning Professional Practice Test