Part D:

is future-oriented and the future is never certain.
The greater the uncertainty, the greater the need for contingency planning: planning for what the firm will do if future events are different from those expected. Contingency plans are also needed in areas where unexpected events could have a major impact on the organization.

There are two planning techniques: scenarios and simulation models.

A scenario is a projection of expected future conditions. Alternative scenarios are usually presented to top managers who select the one in which they have the most confidence.

Simulation models are used in most functional areas of the firm to test certain propositions; to ask “what if” by using the computer instead of experimenting with the real system. Development and validation of such models can be time-consuming and expensive. In spite of this, the use of simulation models in organizations is wide-spread and still increasing.

Bookmark and Share:

Related posts