Scenario planning – how to find the right strategy at ... - Roland Berger

Roland Berger Strategy Consultants
4.
Detecting weak signals
and blind spots
The next step is to compare internal and external stakeholders'
assessments and consolidate findings. All factors that show
potentially significant influence are identified, paying particular
attention to "weak signals" and "blind spots".
"Weak signals" are trends only a few stakeholders mention in the
first survey, but nearly all second-round respondents rate as
factors that could become highly relevant to a company's future
performance. For example, the global manufacturing study
detected that companies greatly underestimate the importance
of securing access to rare earth metals. Future demand will be
enormous. The industry already uses around 130,000 tons per
year of these rare metals worldwide. Neodymium and yttrium, for
example, are particularly important in electric car batteries and
engines. Rising use of these materials is also boosted by
electronic equipment like flat-screen televisions and industrial
superconductors. Analysts predict that demand will reach
190,000 tons in 2015. To meet that demand, Europe is highly
dependent on maintaining good relationships with supplier
countries, notably China.
"Blind spots" are differences in how internal and external
stakeholders interpret a factor's importance. For example,
our pharmaceutical and automotive sector studies show
that when management gives excessive attention to internal
perceptions and preoccupations, important market
opportunities may be missed.
A recent pharmaceutical industry survey of all stakeholders
detected insufficient in-house appreciation of biosimilars. These
are bioengineered follow-on drugs officially approved after the
original drug's patent has expired. Experts predict the biosimilar
market, with total sales of USD 400 million in 2010, will grow in
four years to USD 2 or 3 billion. 2 The reason why biosimilars are
an exciting option for the pharmaceutical industry is that
more and more emerging countries will demand and have the
resources to pay for improved healthcare. The trends are already
apparent. Over the past five years, per capita health spending
in the BRIC countries rose by USD 87. In absolute terms,
this means people purchased an additional USD 252 billion 3
in healthcare services.
Our survey of the automotive sector discovered another blind spot:
some managers severely underestimate the market potential of
simpler, more affordable vehicles. In India, small or economy
cars account for over 70% of all new vehicle registrations. Another
internal misperception was a failure to appreciate emerging
economy manufacturers' competitive strengths. Over the last five
years, passenger car production in developed countries decreased
by 2% annually to 32 million, but in developing countries, car
assembly doubled from 16 to 32 million cars. Emerging market
manufacturers now also venture into European territory:
Great Wall Motors will be the first Chinese automaker to
assemble cars in the European Union when the company opens
a car manufacturing plant in Bulgaria. The plant will have an
annual production capacity of 50,000 units and assemble four
different models – a sports utility vehicle (SUV), a pickup and
two passenger car models – which are all expected to be sold in
the European Union.
Qoros, a Chinese brand previously unknown in Germany, recently
announced plans to sell cars in Europe. Starting in mid-2013,
some 150,000 vehicles will roll off Qoros production lines and
capacity will ramp up to double the output within the next few
years. The company intends to earn half its revenue in Europe.
These examples show how European-based companies may
miss market opportunities and lose revenue if they concentrate
too intently on internal opinions and priorities.
2) Global Industry Analysts (2010) 3) Euromonitor (2011)