Decision making under extreme uncertainty: blending quantitative modeling and scenario planning

Abstract

Purpose

This disguised case aims to describe a scenario planning project to improve decision making for a manufacturer operating in Brazil's confusing, unpredictable politico‐economic environment. “BrasilAuto's” management team faced a range of complex choices related to capacity, vehicle mix, pricing, distribution, dealer relationships, exports, labor and government relations.

Design/methodology/approach

The consultants used a combination of scenario planning and quantitative analysis to answer the company's two key questions: where is the country headed and how many vehicles can we expect to sell, looking across a range of business environments?

Findings

As a result of the scenario exercise, company execs had a better idea of what to watch for in the political sphere and how to anticipate the actual market impact of changing economic policy options. Having looked at the range of plausible business environments hard and carefully, their uncertainty was significantly less unsettling or paralyzing than it had been.

Practical implications

The consultants discuss the lessons learned – for the client and for improving the process.

Originality/value

It's rare to have an insider's view of a scenario process that attempts to produce both quantitative and qualitative insights into a range of distinctly different political/economic futures and their impact on an industry.

Citation

Kennedy, P.J. and Avila, R.J. (2013), "Decision making under extreme uncertainty: blending quantitative modeling and scenario planning", Strategy & Leadership, Vol. 41 No. 4, pp. 30-36. https://doi.org/10.1108/SL-04-2013-0025