Strategic

Business
Analysis

Learn More Prof. JB Bernat, PhDc

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FORECASTING
•Forecasting, which aims to predict, with varying degrees
of precision or certainty.
•Macro-environmental forecasting draws on PESTEL
analysis and often makes use of three conceptual tools:
megatrends, inflexion points and weak signals.

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FORECASTING
•Forecasting takes three fundamental approaches to the
future based on varying degrees of certainty:
• single-point,
• range, and
• multiple-futures forecasting.

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FORECASTING APPROACHES
•Single-point forecasting is where organizations have
such confidence about the future that they will provide just
one forecast number (as in Figure 2.8 i).

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FORECASTING APPROACHES

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FORECASTING APPROACHES
•Range forecasting is where organizations have less certainty,
suggesting a range of possible outcomes. These different
outcomes may be expressed with different degrees of
probability, with a central projection identified as the most
probable (the darkest shaded area in Figure 2.8 ii), and then a
range of more remote outcomes given decreasing degrees of
likelihood (the more lightly shaded areas).

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FORECASTING APPROACHES

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FORECASTING APPROACHES
•Alternative futures forecasting typically involves even
less certainty, focusing on a set of possible yet distinct
futures. Instead of a continuously graduated range of
likelihoods, alternative futures are discontinuous: they
happen or they do not, with radically different outcomes
(see Figure 2.8 iii).

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DIRECTIONS OF CHANGE
•Megatrends are large-scale political, economic, social,
technological, ecological or legal movements that are
typically slow to form, but which influence many areas of
activity, possibly over decades.

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DIRECTIONS OF CHANGE
•Inflexion points are moments when trends shift in
direction, for instance turning sharply upwards or
downwards.

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DIRECTIONS OF CHANGE
•Weak signals are advanced signs of future trends and are
particularly helpful in identifying inflexion points.
•Typically these weak signals are unstructured and fragmented
bits of information, often perceived by observers as ‘weird’.

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MACRO-ENVIRONMENT
•Scenario analysis – a technique that develops plausible
alternative views of how the environment might develop in
the future.
•Scenarios offer plausible alternative views of how the
macro-environment might develop in the future, typically in
the long term.

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MACRO-ENVIRONMENT
•Scenario analysis is typically used in conditions of high
uncertainty, for example where the environment could go in
several highly distinct directions.
•Scenarios tend to extend too far into the future to allow
probability calculations and besides, assigning probabilities
directs attention to the most likely scenario rather than to the
whole range.

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Common Types of Scenarios

• Evolution: all trends continue as

expected. Things gently move
toward a predictable end point.

• Revolution: a new, disruptive,

factor fundamentally changes the
situation.

• Cycles: what goes around comes

around. Boom follows bust follows
boom follows bust.
Common Types of Scenarios

• Infinite Expansion: exciting trends

continue. Think of the computer
industry in the 1950s.

• Lone Ranger: the triumph of the

lone hero against the forces of
inertia.

• My Generation: changes in culture

and demographics affect the
situation.
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•Defining scenario scope is an important first step in the process.
•Scope refers to the subject of the scenario analysis and the time
span.
•For example, scenario analyses can be carried out for a whole
industry globally, or for particular geographical regions and markets.

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•Identifying the key drivers for change comes next.
•Here PESTEL analysis can be used to uncover issues
likely to have a major impact upon the future of the
industry, region or market.

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•Developing scenario ‘stories’.
•As in films, scenarios are basically stories. Having selected
opposing key drivers for change, it is necessary to knit
together plausible stories that incorporate both key drivers
and other factors into a coherent whole.
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•Identifying impacts of alternative scenarios on
organizations is the next key stage of scenario building.

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•Monitor progress. Once the various scenarios are drawn
up, organizations should monitor progress over time, to
alert themselves to whether and how developments
actually fit scenario expectations.

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ASYNCHRONOUS TASK
1. This task will be done by group.
2. As a group, choose a company currently operating in the
Philippines.
3. Conduct a PESTEL analysis of the industry/business environment
where your chosen company belongs to.
4. Indicate the references/sources used in your research. Follow the
APA style of referencing.

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 PESTEL ANALYSIS MATRIX

Factor Key Information

Political
Economic
Socio-Cultural
Technological
Environmental
Legal

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Reference List:

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 ASYNCHRONOUS TASK

Supplementary Reference Material about PESTEL:

https://www.cipd.org/globalassets/media/knowledge/knowledge-hub/factsheets/pestle-analysis-
factsheet_20221230T092611.pdf?_gl=1*12is6nf*_ga*MTI0MzYwNDcuMTY4MjY3NzcyMw..*_ga_D9HN5G
YHYY*MTY4MjY3NzcyMi4xLjAuMTY4MjY3NzcyMi42MC4wLjA.

https://corporatefinanceinstitute.com/resources/management/pestel-analysis/

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