Scenario Planning, Tool, 2012 (PDF, 4535 KB) - Roland Berger

Scenario planning 

A pragmatic approach to prepare companies for global uncertainties 

Vienna, February 2012 

VIE-9800-97000-803-241_Scenario_Planning (3).pptx 

1

Contents Page 

A. Introduction – 

Volatility will remain high also in 2012 3 

B. Our solution – 

Roland Berger's scenario planning methodology prepares companies for 

macroeconomic uncertainties 8 

C. Roland Berger contact – 

We understand the key industry challenges 18 

This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may 

not be passed on and/or may not be made available to third parties without prior written consent from Roland Berger Strategy Consultants. RBSC does not assume any responsibility for the completeness 

and accuracy of the statements made in this document. 

© Roland Berger Strategy Consultants GmbH 


2

A. Introduction – 

Volatility will remain high also in 2012 


3

Today the economy faces high volatility making accurate forecasts 

challenging even for established international institutions 

Eurozone GDP forecast for FY 2012 – 

Development of forecasts over time 

SPREAD IN JANUARY 2011 CONSENSUS MEAN FORECAST 

OECD 

Goldman Sachs 

European Commission 

Consensus mean 

Natixis 

Econ Intelligence Unit 

2.0 

1.9 

1.8 

1.6 

1.5 

1.7 

1.6 

Budge- 

ting 

period 

Citigroup 

Source: Consensus Economics Inc. 

1.4 

1.2 

Jan 

2011 

Apr 

2011 

Jul 

2011 

0.6 

Oct 

2011 

Dec 

2011 

-0.1 

Challenges of forecasts 

> Economic forecasters use 

complex models of economic 

development – but 

they often fail, e.g. in pre- predicting 

the crisis 

> Economic trends are unreliable 

and future developments 

unclear – decisions 

must still be made 

> Our job is to interpret the key 

factors driving future economic 

development 


4

Strategy planning is essential – Several key questions need to be 

taken into account and alternatives to be considered 

Key questions (exemplary) 

> How will regulations change in my markets? 

Will these changes open up new markets overseas or 

put established markets at risk? 

> How sharply will commodity and energy prices rise? 

Can we replace expensive commodities or will a Chinese 

monopoly endanger our supply? 

> Which regions of the world will grow most? 

Can we benefit from emerging markets or are 

emerging players threatening our home markets? 

> How will exchange rates develop? 

Can we leverage a low-cost production base or do we 

lose competitiveness? 


5

Current macroeconomic uncertainties are expected to keep volatility 

high and must be monitored 

Macroeconomic risks (1/2) 

EU 

Sovereign 

debt crisis 

Shortage of 

energy 

supply 

Economic 

slowdown 

Policy changes 

due to 

political 

elections 

> Escalation of European sovereign debt crisis 

due to increasing pressure from financial 

markets and/or political inability to reform 

> Significant rise of raw material and energy 

prices for producers and consumers 

> Economic slowdown of major economies due to 

persistence or acceleration of economic crisis 

> Changing political orientation due to leadership 

shifts in major economies worldwide in 2012 

Influencing factors 

(exemplary) 

> Bankruptcy of Greece 

> Downgrading of France 

> Refinancing of Italy 

> Exit of individual countries from EMU 

> Blockage of the strait of Hormuz by Iran 

> Interruption of Russian gas supply to Europe 

> Recession in Germany 

> Recession in the US 

> Slowdown in China 

> Russia (March) 

> France (April and May) 

> China (October) 

> US (November) 


6

Current macroeconomic uncertainties are expected to keep volatility 

high and must be monitored 

Macroeconomic risks (2/2) 

Political 

revolutions 

in Africa 

and ME 

Legislative 

changes 

Trade 

disruptions 

Social 

unrest in 

Western 

countries 

> Continuation of government upheavals in North 

and Sub-Saharan Africa and Middle East 

> Persisting political uncertainty in Arab Spring 

countries 

> Sudden legislative changes with regards to 

environmental pollution, financial speculation, 

etc. 

> Increasing trade barriers for short-term support 

of national economies 

> Rising discontent with political and economic 

system in Western countries 

Influencing factors 

(exemplary) 

> Lack of investments in North African countries 

due to uncertain development 

> Interruption of oil exports due to political unrest 

(e.g. Libya, Nigeria) 

> Post-Kyoto agreement (future of emissions 

trading) 

> Implementation of financial transaction tax 

> Stricter vehicle emission limits (e.g. CO 2, NOx) 

> Increasing trade war between US and China 

> Protectionism by major economies (e.g. China 

for rare earth metals) 

> Currency manipulations (e.g. Swiss Franc link 

to Euro, Yen devaluation) 

> Increasing strikes in Europe and US 

> Decreasing consumer and investor confidence 


7

B. Our solution – 

Roland Berger's scenario planning methodology prepares 

companies for macroeconomic uncertainties 


8

Traditional strategy tools have significant shortcomings in volatile 

environments – The solution is scenario planning 

Traditional strategy tools … Scenario planning … 

… fail to reflect volatility 

… cannot cope with complexity 

… do not consider different views 

ANSOFF 

MATRIX 

GENERIC COMPE- 

TITOR STRATEGIES 

EXPERIENCE 

CURVE 

FIVE FORCES PORTFOLIO ANALYSIS 

… provides different images of the future to 

reflect volatility 

… considers numerous influence factors to 

cope with complexity 

… combines internal and external views to 

identify blind spots 

Status quo 

Scenario 1 



Alternative 

Goal A 

Goal 

Alternative 

Goal B 


9

Four steps need to be taken in order to understand and model 

scenarios 

1 

� 

� 

Areas of analysis 

and risk assessment 

Personal cars 

Special vehicles 

� 

Light trucks 

Motorbikes 

> Select relevant industries 

and regions 

> Identify relevant 

macroeconomic risks 

Heavy trucks 

> Detail impact on selected 

macroeconomic and 

industry-specific indicators 

per relevant region 

… 

2 

Development of 

simulation tool 

Scenario I Scenario II Scenario III 

GDP growth I, 

unemployment I, 

inflation rate I, 

… 

Sales 

I 

GDP growth II, 

unemployment II, 

inflation rate II, 

… 

Simulation tool 

Sales 

II 

GDP growth III, 

unemployment III, 

inflation rate III, 

… 

Sales 

III 

> Assess sales sensitivity of 

selected macroeconomic 

and industry-specific 

indicators 

> Conduct a "stress test" 

simulating possible effects 

on sales development or 

bottom line 

3 

Status quo 

Analysis of 

defined scenarios 

and action plans 




Alternative 

Goal A 

Goal 

Alternative 

Goal B 

> Develop limited number 

of scenarios for possible 

sales developments 

based on thresholds for 

selected indicators 

> Define action plans for 

each scenario to achieve 

defined strategy goals 

4 

Original 

scenario 





Continuous 

monitoring 

Regular indicator 

updates 

GDP 

Oil price 

Nr. of 

registrations 


Potential new 

scenario 




> Monitor continuously 

defined macroeconomic 

risks as basis for an early 

warning for potentially upcoming 

indicator changes 

> Update regularly 

indicators in simulation 

tool – Basis for potential 

scenario and action plan 

switch 


10

1 

After defining the geographical and industry scope, the potential 

effects of relevant macroeconomic risks have to be detailed 

� 

� 

Personal cars 

Special vehicles 

REGION 1 

EU Sovereign debt 

crisis 

Shortage of energy 

supply 

Economic slowdown 

Policy changes due 

to political elections 

Political revolutions 

Legislative changes 

Trade 

disruptions 

Social unrest in 

Western countries 

� 

Light trucks 

Motorbikes 

SELECTED INDICATORS 

GDP Oil price 

Nr. of registrations 

? ? ? 

? 

? ? ? 

? ? 

Heavy trucks 

… 

Unemploy 

ment rate FX rate 

> Areas of analysis 

– Regional and industry focus defined by 

senior management 

– Consideration of current and future client 

portfolio and regional/competitor 

dependencies (e.g. supplier location, direct 

competitor presence) 

> Detailing of risk impact 

– Selection of a limited number of relevant 

macroeconomic and industry-specific 

indicators 

– Detailing of risk impact of defined indicators 

per industry and region 


11

2 

The quantitative assessments in defined scenarios are used to estimate 

sales development via a company-specific simulation tool 

Scenario I Scenario II Scenario III 

GDP growth I, 

unemployment I, 

industry 

specific KPI I, 

… 

Sales 

I 

GDP growth II, 

unemployment II, 

industry 

specific KPI II, 

… 


Sales 

II 

GDP growth III, 

unemployment III, 

industry 

specific KPI III 

… 

Sales 

III 

> Assessment of the relevance of each 

macroeconomic and industry-specific 

indicator to select parameters for the tool 

(e.g. GDP growth, unemployment rate, inflation 

rate, interest rates) for each of the scenarios 

> A company-specific simulation tool is 

developed using parameter input to calculate 

sales development in key markets for each 

scenario 

> Inclusion of a warning system allows for 

continuous monitoring of the selected indicators 

and highlights the need of a potential scenario 

switch 

� Tool facilitates the scenario monitoring on 

a quarterly basis 


12

2 

Continuous monitoring and rapid responses to scenario switches 

are obtained in a heat map overview 

Scenario assessments – Average across all countries 

Product line 1 











Worst Base Best 

Europe Asia North America South America 

Worst Base Best Worst Base Best Worst Base Best Worst Base Best 


13

3 

On the basis of the different scenarios action plans have to be 

developed to reach the company's strategic goals 

Status quo 




Timeline 

Action plans Regular decision points 

Alternative 

Goal A 

Goal 

Alternative 

Goal B 

> The different scenarios show patterns of 

sales development in the future 

> Switches can occur between scenarios 

keeping the same goal or with an 

alternative goal and a new action plan 

> On the basis of these differences and other 

features of the scenarios, recommendations 

("action plans") for top management have 

to be developed 

> Scenarios and action plans must be 

consistent 


14

3 

Modeling outputs are obtained in different levels of granularity and 

facilitate the review of items such as CAPEX and structural costs 

Scenario modeling output (schematic) 

100% 

2006 

2007 

Source: Roland Berger project experience 

Actual 

2008 2009 2010 2011 2012 2013 2014 

Pre-crisis 

expectation 

Expected 

scenario 

> The final output shows different 

scenarios for sales and 

volume development on group 

level, entity level, per region and 

per country 

> It enables budget corrections to 

be made for certain entities 

> A review of the CAPEX plan 

should be conducted in light of 

the scenario developments 

> Adaptations in structural costs 

(e.g. production capacities) 

should be conducted 


15

4 

Continuous monitoring enables companies to receive warnings of 

potential scenario and action plan switches 

REGION 1 

EU Sovereign debt 

crisis 

Shortage of energy 

supply 

Economic slowdown 

Policy changes due 

to political elections 

Political revolutions 

Legislative changes 

Trade 

disruptions 

Social unrest in 

Western countries 

OVERALL 

TENDENCY 

Original 

scenario 





GDP Oil price 

Nr. of registrations 

? ? ? 

? 

? ? ? 

GDP 

Oil price 

? ? 

Regular indicator 

updates 

Nr. of 

registrations 

Current 

status 


Potential new 

scenario 




> Regular monitoring of global uncertainties 

and their effects on indicators acts as a signal 

for potentially upcoming scenario changes 

> Global events with uncertain indicator 

tendencies (e.g. political elections) must be 

monitored closely to detail effects on 

indicators based on new information 

> Indicator figures should be updated in the 

simulation tool continuously as a basis for 

potential scenario and action plan switches 

> Scenario switches require roll out of 

appropriate action plans – Unforeseen 

developments may need adaptations of the 

strategic goal and action plans 


16

To sum up: Today we need scenarios and we need to develop them 

quickly and systematically 

> Our world faces continuous volatility – that is especially 

true for the economy 

> To stay competitive in this environment companies need 

to develop scenarios 

> Roland Berger enables companies to quickly build 

scenarios with a proven tool-based approach 


17

C. Roland Berger – 

We understand the key industry challenges 


18

Roland Berger is a thought leader and understands the main 

challenges of the global economy 


19

Roland Berger has a strong presence in CEE and can support you 

with local know-how and profound international experience 

> One multicultural region within the Roland Berger 

network 

> 200 consultants, 50 support staff/research 

> Sustainable and dynamic growth over last past 15 

years 

> Local know-how combined with international 

experience 

> Intense know-how exchange within the region and 

internationally 

Offices Project offices 

RUPERT PETRY 

MANAGING PARTNER AUSTRIA 

Roland Berger Strategy Consultants 

Freyung 3/2/10 

1010 Vienna, Austria 

Tel.: +43 1 53602-101 

E-mail: rupert_petry@at.rolandberger.com 

LJUBL- 

JANA 

PRAGUE 

WARSAW 

RIGA 

TALLINN 

BRATISLAVA 

VIENNA BUDAPEST 

ZAGREB 

BELGRADE BUCHAREST 

SARAJEVO 

PODGORICA SKOPJE 

SOFIA 

KYIV 

MOSCOW 

ISTANBUL 


20

It's character 

that creates 

impact! 


21

Scenario Planning, Tool, 2012 (PDF, 4535 KB) - Roland Berger

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