Scenario planning for service quality: a Monte Carlo simulation study

Abstract

Purpose

The purpose of this paper is to propose the idea of linking the use of the Monte Carlo simulation with scenario planning to assist strategy makers in formulating strategy in the face of uncertainty relating to service quality gaps for life insurance business, where discontinuities always remain for need‐based selling.

Design/methodology/approach

The paper reviews briefly some applications of scenario planning. Scenario planning emphasizes the development of a strategic plan that is robust across different scenarios. The paper provides considerable evidence to suggest a new strategic approach using Monte Carlo simulation for making scenario planning.

Findings

The paper highlights which particular service quality gap attribute as risk impacts most and least for the possibility of occurrences as best case, worst case, and most likely case.

Research limitations/implications

This study suffers from methodological limitations associated with convenience sampling and anonymous survey‐based research.

Practical implications

The approach using Monte Carlo simulation increases the credibility of the scenario to an acceptable level, so that it will be used by managers and other decision makers.

Social implications

The paper provides a thorough documentation on scenario planning upon studying the impact of risk and uncertainty in service quality gap for making rational decisions in management of services such that managers make better justification and communication for their arguments.

Originality/value

The paper offers empirical understanding of the application of Monte Carlo simulation to scenario planning and identifies key drivers which impact most and least on service quality gap.

Citation

Prakash, A., Jha, S.K. and Prasad Mohanty, R. (2012), "Scenario planning for service quality: a Monte Carlo simulation study", Journal of Strategy and Management, Vol. 5 No. 3, pp. 331-352. https://doi.org/10.1108/17554251211247599