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Assess the usefulness of scenario planning to a business, such as ASOS - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Question 2
Assess the usefulness of scenario planning to a business, such as ASOS. Scenario planning is the process of anticipating possible changes in a business's situation ... show full transcript
Worked Solution & Example Answer:Assess the usefulness of scenario planning to a business, such as ASOS - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Step 1
Potential usefulness of scenario planning
Answer
- Identification of Key Risks: The scenario planning allowed ASOS to identify various risks associated with the Berlin fire, enabling the company to respond quickly.
- Minimized Disruption: Thanks to scenario planning, ASOS managed to mitigate the impact of the Berlin fire and continued fulfilling orders without significant interruption.
- Maintaining Sales: The effective scenario planning helped ASOS to maintain sales through their Barnsley warehouse despite the challenges posed by the fire.
Step 2
Potential limitations of scenario planning
Answer
- Financial Loss: ASOS still incurred a loss of £6m worth of stock due to the Berlin fire, suggesting that while scenario planning is helpful, it can't completely prevent damage.
- Resource Allocation Costs: There are significant costs associated with scenario planning that could have been invested in other areas, like website development or marketing.
- Increased Operational Costs: The need to fulfill orders from the Barnsley warehouse after the Berlin incident likely resulted in increased operational costs for ASOS.
Step 3
Potential judgement on scenario planning
Answer
- Useful but Imperfect: ASOS's scenario plan proved beneficial as it was implemented immediately after the Berlin fire, allowing for a quick recovery.
- Uncertainty in Risks: Although effective, scenario planning cannot account for all potential disasters, which means ASOS needs to continue refining and improving its plans.
- Continued Importance: The ability to identify and mitigate risks through scenario planning adds valuable resilience to business operations and can reassure stakeholders and investors.