Scenario Planning as Approach to Improve the Strategic Performance of Multinational Corporations (Mncs)

By Abuzaid, Ahmad Nasser | Business: Theory and Practice, March 2018 | Go to article overview

Scenario Planning as Approach to Improve the Strategic Performance of Multinational Corporations (Mncs)


Abuzaid, Ahmad Nasser, Business: Theory and Practice


Introduction

The challenges facing multinational corporations in the business environment can be described by the "volatility, uncertainty complexity and ambiguity" (Bennett and Lemoine 2014). Looking at these challenges, we can see that traditional strategic planning tools may lack an essential future-related perspective (Hartmann and Stillings 2015). Traditional methods often rely either on past experiences or at most on snap shots of the present when describing the business environment. Therefore, multinational corporations increasingly attempt to cope with this risk by trying to understand and manage the future (O'Brien and Meadows 2013, Bowman et al. 2013). In addition, the rapid pace at which changes in economic and business conditions are occurring has been highlighted as a major challenge for multinational corporation. Such a change directly impedes multinational corporation's ability to implement their intended strategy. Within this environment, managing uncertainty becomes especially important (Simons 1990). Scenario planning as a business activity has gained increased traction as a tool for addressing complexity uncertainty and the unknown (Haasnoot et al. 2013, Oliver and Parrett 2017).

Scenario planning is increasingly well established as a means of preparing individuals and organizations to respond to the uncertainty and chaos of the global work environment (Rigby and Bilodeau 2007, Bradfield et al. 2005, Chermack 2011, Durance and Godet 2010, Schwartz 1996, Wack 1985, Chermack et al. 2017, Kahane 2012, Ramirez and Wilkinson 2016, Schoemaker 1995, Cox Landolt 2000, Malaska et al. 1984). Therefore, scenario planning is deemed a useful instrument that assist multinational corporations to be ready for potential probability, and improves their flexibility (Argueta et al. 2016), enhances their innovation capabilities (Hiltunen 2009), helps multinational corporations to understand the environment and determine the interactions between sundry future trends and events (Martino 2003) in addition to predict the consequences of a specific decision or choice (Strauss and Radnor 2016).

However, because multinational corporations leaders are under pressure to justify the investment of resources, some type of criterion needs to be developed that shows a clear link between scenario planning and strategic performance. One possible step in providing this link may lie in establishing the actual effect scenario planning has on the strategic performance (Puthenveetil 2016). Some scholars like (Chermack and Lynham 2002, Hartmann and Stillings 2015) pointed out that empirical evidence of the effect of scenario planning on strategic performance of multinational corporations is almost nonexistent. In fact, this lack of an evidence regarding the influence of scenario planning on strategic performance may indicate to a greater gap in the body of knowledge that is used to develop of scenario planning and inform of the practice. Therefore, the importance of understanding how scenario planning may influence and improve performance has stimulated calls to further explore the impact of scenario planning on strategic performance (e.g., Phelps et al. 2001, Visser and Chermack 2009, Lindgren and Bandhold 2009, Chermack 2011, Zahradnickova and Vacik 2014). Thus, the current study tries to explore the link between scenario planning and strategic performance in Jordanian context.

1. The study problem

In today's global economy, the main players are multinational corporations. They are the exporter of major capital, technology transfer, knowledge, expertise, and international market access. MNCs have a fundamental effect on technology transfer social and infrastructure development. It assists in replacing declining market sectors, activating employment, and increasing wages, Thus, having social and cultural effect if the investment is directed toward non-traditional sophisticated product (Summit 2002). …

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