subject: Scenario Planning [print this page] Scenario Planning Scenario Planning
Scenario planning is also called scenario thinking is a strategic planning technique that is used by organizations in making long term plans. This technique is mostly used by policy or decision makers in coming up with a conclusion concerning a business. The original method used in scenario planning as far as businesses are concerned, this planning was viewed as a way of changing attitudes concerning the exogenous part of the business world before formulation of particular strategies. Importantly, the aspect of scenario planning involves the concept of systems thinking particularly the recognition that a number of factors may combine in complicated ways in the creation of the future. It should be noted that, the aspect of scenario planning incorporates factors that are difficult to formalize which include shifts in values and unprecedented regulations or inventions. There is a demonstration of the causal relationship between factors in business management. The concept of scenario typically includes reasonable but unpredictably significant situations and problems that are resent in small form in the current business world. Importantly, scenario planning is much helpful to the decision makers in predicting hidden weaknesses and inflexibilities in an organization (Coates 2000).
Background of the British Petroleum
British Petroleum is an international petroleum company with its headquarters in London. It is one of the largest energy producing companies. Importantly, this company provides the customers with fuel used in transportation, energy used in lighting and heating, retail services and petrochemicals that are used in everyday items globally. When measured in terms of profits, it is the third largest company in the world supplying petroleum products to the customers. The British Petroleum Company operates in over 80 countries all over the world producing around 3.8 million barrels of oil. Importantly, this company has been faced with a number of environmental controversies with the recent one been on the year 2010 Deepwater Horizon oil spill. Most of the oils used in BP are derived from the Middle East and some parts of North Africa (Bamberg 2000).
The British Petroleum is reported as one of the most successful companies in the global market in terms of sales. On this basis, a lot of profits are made by this company that increases the revenue of the British government. The table below indicates the financial data in millions of US dollars from the year 2002-2009.
Year
2002
2003
2004
2005
2006
2007
2008
2009
Sales
180,186
236,045
294,849
249,465
265,906
284,365
361,341
239,272
EBITDA
22,941
28,200
37,825
41,453
44,835
New Results
6,845
10,267
15,961
22,341
22,000
20,845
21,157
16,578
New Debt
20,273
20,193
21,607
16,202
16,202
It has been estimated that, the oil reserves in Middle East and North Africa could last for the next 60-80n years hence the planning of this company should be well organized to avoid collapsing as a result of lack of oil. This is a major problem facing this company as the consumption of oil in increasing from time to time hence increasing the rate of oil mining in the reserves. This is anticipated to result to a decrease in the estimated time when the oil will last in the reserves. The increased consumption of oil will lead to production problems as many industries that manufacture products will be faced with the problem of reduced provision of oil when it deprives in the reserves. In order to avoid this phenomenon, it would be very efficient if some of the areas that are suspected to contain oil are mined in order to tap oil. Such areas include the Arctic Ocean. In this case, a significant accumulation is suspected to contain recoverable volumes of more than fifty million barrels of oil or oil-equivalent natural gases (British Petroleum Company 2009).
Summary of the Group's Scenarios
This report will address the scenarios that are used in planning or analyzing for the future in decision and policy making. Most importantly, these scenarios will be addressed to the executive team who are the decision makers in the British Petroleum Company. The first scenario is the aspect of smooth cruising. In this case, the BP Company would like to provide for a smooth transportation in the whole world. This scenario will be used in determining the strategies that need to be implemented in order to accomplish it. It should be noted that, in order to have a smooth transportation the provision of petroleum products by the BP Company should be available and at low costs. Importantly, this scenario is faced by challenges of low progress in economy. In this case, the economy in most of the developing countries and the developed countries where the BP has branches has a slow growth. This issue should be addressed in terms of improving the economy throughout the world. Additionally, oil utilization is a notable factor in the whole world. The demand for oil has increased drastically while the oil reserves are depleting. This is a major problem that would face this company in future and hinder its provision for smooth transportation. As many economies in terms of development, there are increased pollutions that emanated from the utilization of oil. In this case, these pollutions would be managed by looking for other means of energy provision. On the other hand, the BP Company has been improving in terms of revenue as there are no major oil disputes globally. This is another factor that should be considered as in future there could be oil disputes brought about by high rates of oil depletion (Schreifer 1995).
The second scenario is the aspect of a pleasant long journey where the sea is the main medium of transportation. In order to provide a pleasant voyage, there should be technological developments where the ships or boats used in transportation will be consuming low amounts of petroleum products. This is a scenario that should be addressed in order to make sure that the future will not affect this company when the oil reserves deprives. There should be provision of cheaper and more efficient alternative fuel that will last long as compared to oil and petrol. The rationale behind this is that there is an increased demand for petroleum products making it very costly. Additionally, this scenario indicates that, there should be investments directed into alternative energy resources like cola energy and hydro energy. This would help in saving the available amounts of oil present in the reserves. Additionally, it is important to look at more eco-friendly transport that will result in cutting down on environmental pollution. It should be noted that, the aspect of preventing environmental pollution is very crucial in the modern world and hence the BP Company should come up with other methods of transportation that do not pollute environment. In the year 2010 the BP was faced with environmental controversy where there were spilling of the ocean water by oil. Additionally, there is an anticipated boom in economy in the line of oil industry (Mietzner & Reger 2005).
The third scenario is that of bumpy-ride where the oil provided causes a lot of problems in the process of transportation. In this case, there is less concern of the environment as the oil produces a lot of smoke that is harmful to the environment. There are no major technological development in the oil industry and other transportation industry especially in motor vehicles where the produced vehicle would produce less amount of smoke to the environment. Additionally, the war that was between the United States and Iran on the mining of oil will lead to oil reserves depleting faster than it is expected. As a result of this, there will be inadequate resources of oil in the future. In this case, strategies should be put in place in controlling this phenomenon. Additionally, there lack of discovery of new resources of oil is a challenge to the BP Company. Investments should be directed in discovering new oil resources like in Arctic Ocean (Ringland 2006).
A description of Opportunities and Threats for the BP Company in each scenario
It should be noted that, the BP Company has increased in opportunities in bringing about smooth cruise following the lack of major international dispute in oil. Additionally, there are opportunities of investing in new resources of oil in order to improve the level of growth of the world's economies. The technological advancement in the BP Company creates an opportunity for controlling environmental pollution especially through spilling. Notable, there are other methods of energy production that could be used to replace the oil and hence combating the threat of oil depletion in oil reserves. The technological advancement in this company provides an opportunity providing oil related industries with machines that use little oil. This will help in satisfying the increased demand for oil by providing little oil that would serve the intended purpose (Coates 2000).
