Week 7 Activity-Scenario Planning

Develop ideas of where we chould incorporate the use of scenario planning in our organizations. 


Qi Yang (Carol):

The Focal issue: Managers in IKEA say they fear a looming wood shortage and possible layoffs. It is deeply indebted to wood. Approximately 50% of IKEA's products are made from wood or wood fibers. Wood is a valuable resource, and resource efficiency is of great importance not only from an environmental point of view but also from a cost perspective. IKEA sources globally to ensure the best possible price and the best possible quality of its products, and also put the resources in place to make sure that the wood that they using meets their requirements. But now, one of the big challenges is that the availability of Forest Stewardship Council (FSC) certified wood in many regions is very low. IKEA sources more than 2 million cubic meters of FSC certified wood. But it still can only meet their minimum requirements. It is hard to ensure them meet their sustainability targets. There are two important reasons of the shortage of supply. The first one is that deforestation rates are still alarmingly high across the globe, although the rate has slowed in recent years and illegal logging continues in many tropical forests. Another is the waste of producers during manufacturing. In conclusion, the shortage of supply has a great effect on IKEA’s global market and future growth.

It will become "forest positive" by 2020, meaning that, despite its continuing high demand for timber, it intends its business to have an overall positive effect on the world's forests. Integral to this approach is the commitment that it will be growing at least as many trees as it uses to make products by 2020. Yet making this vision a reality will pose serious challenges. The company is hinging its forests positive strategy almost entirely on its relationship with one global certification scheme, the Forest Stewardship Council (FSC). However it actually failed to meet 2012 targets of 35% of all solid wood to be sourced from "preferred sources". But IKEA believes that by throwing their considerable weight behind the FSC, the company will be able to help the growth of FSC-certified wood supply, promote better forest management and contribute to ending deforestation.

Major Stakeholders effected: Wood supplier, manufacturing department, the Forest Stewardship Council, customers, etc.

Driving forces: environment requirements, industry needs, economic effectiveness, technology development, support from FSC, and societal trends.

 

Strategy: To be concluded, one of the biggest challenges for the 21st Century is how to address resource scarcity and climate change whilst providing a great quality of life for people around the world. People & Planet Positive will help IKEA Group to play a small but significant part in meeting those challenges. In addition to contributing to the quality of life of people and communities where it operates, it will use resources with the utmost efficiency and turn waste into resources. Only renewable energy will be used in IKEA Group operations, while safe chemicals, responsible stewardship of forests, water and farmlands will be the base of its supply chain. More environmental friendly materials will take the place of many conventional ones to face wood shortage. Furthermore, old furniture recovery will run on a long period basis.

Yike Wang ( Daisy):

We all know that the world's financial crisis in 2010 have caused varying degrees of combat and injury of most enterprises over the world. As the financial crisis les consumer income falls, the United States retail industry is also stuck in the doldrums. In October 15th, the United States Department of Commerce announced that in 2010 September, the United States of America retail sales dropped 1.20%. This is the industry's biggest drop of income over the past 3 years. In October, the United States of America California department store chain Mervyn 's announced that they have already closed 149 stores before the end of the year, the company has filed for bankruptcy. At that time, WAL-MART has still maintained a steady growth, 2012 sales revenue growth in September 2.40%. WAL-MART executives have said, the low cost strategy is the magic weapon to tide over the difficulties. "Now people aren't 'want' low-cost goods, but 'urgent' low-priced goods." WAL-MART Craig Americas President Herkert said to the "financial" reporters, "low price policy is very useful in the world, each economy, every year will play an important role, whether in the worst year or in a good one. People tend to save money, especially for daily consumer goods."

Implementing a scenario planning process:

1.     Identify focal issue

The focal issue in my organization is that Wal-Mart wants to survive the crisis and make a increase in its sales.

2.     Search for driving forces

Insist the low-cost products to customers

Have a stable relationship with their suppliers

3.     Find uncertainties

How vast the financial crisis will relate

How would other enterprises reply this financial crisis

How the suppliers were be influenced

The view of customers treat financial crisis

4.     Formulate scenario logic

Because of the financial crisis, customers has low income which means that need to spend less money in their daily spending. The demand decrease may leads some small enterprise folds up.

5.     Strategic analysis

In the financial crisis, economic developed slowly, consumers have less money in their pockets, so they tend to choose cheaper products, which makes WAL-MART products have more advantages; from the supplier's point of view, now all retail enterprise are placed in jeopardy, suppliers prefer to cooperate with and those large-scale enterprises which have stable profit, because in that way will make them feel the safest.

Waiyan Yanny Sit:

Focal Issues

Rogers is in constant expansion. As of 2013, Rogers has over 9 million customers all over Canada. One of the problems facing Rogers over the next few years is their ability to provide service to all their customers. Rogers is facing a major problem. Their network is showing signs of congestion. Since Rogers launched their LTE network in 2011, most of their time has been spent trying to turn on new LTE locations in Canada. They are limiting their resources going towards tower maintenance and upgrades. As such, as more and more people are joining Rogers, some cell sites, including some older LTE locations, are reaching their maximum capacity. Customers are experiencing more and more dropped calls and network slowdowns for their Internet. The advent of popular and data hungry phones such as the iPhone 5 is not helping the cause. One way to solve this problem is to build more towers to accommodate expected growth in the cellular business.

Driving forces

Ensuring service levels stays the same or increases throughout Canada, ensuring the infrastructure is in place and ready for an expansion

Uncertainties

May not get expected customer growth

Although cost of service is getting cheaper, plan prices are also dropping, and on top of building out a new network, balance sheet may not be healthy enough to support upgrading existing infrastructure

Formulate scenario logic

Rogers can go about expanding major cities first (Toronto, Montreal, Vancouver), secondary cities next (such as Ottawa, Calgary, Quebec City) and smaller markets when budget allows (Such as Sherbrooke, Windsor, Kelowna). They can also slow down LTE rollout throughout Canada and concentrate on beefing up their current cell sites first.

Strategic Analysis

Upgrading existing sites will allow Rogers to keep up with the increasing demand of customers on their network. The major urban population of Canada lies in the three main cities (Toronto, Montreal and Vancouver), so upgrades to these areas should be prioritized. As such, Rogers will be able to provide existing customers with the same level of service as when they first signed up, diminishing the probability that they may go elsewhere. This will ensure that Rogers will be able to not only keep their existing customer base, but also allow room for expansion when new customer decide to sign on. 

HE Yingying (Helena)

Introduction to Scenerio Planning (Youtube V)

The focal issue:

The HSBC Group is one of the world's largest banking and financial services organisations. The Group has around 8,000 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.  HSBC provides a comprehensive range of financial services through four customer groups and global businesses: Retail Banking and Wealth Management; Commercial Banking; Corporate, Investment Banking and Markets; and Private Banking. Established in Hong Kong in March 1865 and in Shanghai one month later, The Hongkong and Shanghai Banking Corporation is the founding member of the HSBC Group. It is the Group's flagship in the Asia-Pacific region and the largest bank incorporated in Hong Kong. As I have mentioned in the last session, avoiding financial crime is one of the responsibilities and goals of HSBC. Although the technology has played an essential role in monitoring the strange transactions, HSBC still faces the great risk of neglecting some unconspicuous transactions. As a banking corporation expanding over the globe, HSBC carries so much responsibility. So how does HSBC IT department perform in the future?

Driving forces:

Revenue and compliance

Uncertainty:

How to identity a strange transaction not just based on the monitoring rules?

How to improve the information system in fixing the bugs?

How to train the stuff to raise the awareness of financial crimes?

Scenerio logic:

Because of the great lose of the possible financial crime and responsibility, HSBC have to come up with a specific plan for the future and prepare for the emergency.

Strategy analysis:

HSBC should take strategies in several aspects. First HSBC should keep on developing e-learning courses for the stuff to raise the awareness. Second, HSBC should improve the information system equipped with information technology to do correction. Third, HSBC should hire external party to do audit. Last but not the least, HSBC should set up and improve the professional skills of the compliance department to keep an eye on their services.

Tang Lu (Theresa)

The focal issue:

KFC is the world-famous fast food representative which enjoys a high popularity round the world. An "American icon", it is the world's second largest restaurant chain overall (as measured by sales) after McDonald's, with over 18,000 outlets in 120 countries and territories as of December,2012. The type of the food they are mainly offering are fired chicken, which makes the resource of food supply is very limited. Therefore the suitable Scenerio Planning I make for my organization is relating with the crisis of the food resouce. As we know, some flu that has originally came from poultry and now infect human being and cause the fateful consequence. Actually, the latest virus H7N9 has stricken the east part of China, leading at least 10 death for now, and which I believe can be the best focal issue for the enterprise that its entire food supply depends on chicken.

Driving forces:

customers worry about the bird flu and refuse to take the risk.

Uncertainty:

How to find out the resource of food supply(in different countries and territories ) are safe or not?

How to regain the customers faith for the enterprise?

Once confirmed that our food supply did polluted by the virus ?

Scenerio logic:

No matter is the safety of food supply or the big environment which give the negativeimpact on the food especially poultry-related, KFC should really have to come up with several plans for solving the crisis.

Strategy analysis:

1. For the safety of food supply, KFC should have the main food supply fully and deeply checked which needs them to work out the emergence plan for how to get every supply spot  checked within very short time.

2. Prepare the back-up supply spots in case the current supply spot was effected.

3. Setting up the emergence publicity department for updating news of inside information to the company, comforting and regaining customers' faith towards the enterprise.