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Normative scenarios

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Business Valuation

Definition

Normative scenarios are hypothetical situations that represent desirable outcomes or goals based on certain assumptions and values. They are used to evaluate potential future events by exploring what is deemed 'ideal' or 'acceptable,' allowing decision-makers to analyze various strategies in pursuit of those outcomes.

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5 Must Know Facts For Your Next Test

  1. Normative scenarios are crucial for strategic planning, as they help organizations identify and align their objectives with ideal outcomes.
  2. They often incorporate ethical considerations, guiding decision-makers toward choices that reflect their core values.
  3. Normative scenarios can contrast with descriptive scenarios, which focus on what is likely to happen rather than what should happen.
  4. The development of normative scenarios involves input from various stakeholders to ensure that multiple perspectives are considered in defining desirable futures.
  5. These scenarios can be used as benchmarks for measuring progress and success in achieving specific goals over time.

Review Questions

  • How do normative scenarios differ from descriptive scenarios in scenario analysis?
    • Normative scenarios focus on desirable outcomes and what should ideally happen, incorporating values and ethical considerations into the analysis. In contrast, descriptive scenarios aim to predict likely future events based on current data and trends without necessarily considering what is desirable. Understanding this difference helps organizations utilize both types of scenarios effectively for strategic planning.
  • Discuss the role of stakeholder engagement in the creation of normative scenarios.
    • Stakeholder engagement is essential in the creation of normative scenarios because it ensures that diverse perspectives and values are taken into account. Involving stakeholders allows organizations to better understand the ideals and preferences of those impacted by decisions, leading to more robust and inclusive normative scenarios. This collaborative approach not only enriches the scenario development process but also fosters buy-in and support for future strategies.
  • Evaluate how normative scenarios can influence decision-making processes within an organization.
    • Normative scenarios serve as guiding frameworks for decision-making by illustrating ideal outcomes that align with an organizationโ€™s values and goals. When leaders reference these scenarios during strategic discussions, they can better assess choices against desired outcomes, ultimately shaping policies and initiatives. This evaluative process encourages accountability and helps organizations prioritize actions that move them closer to their envisioned future, making normative scenarios a powerful tool for effective governance.

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