1

Strategy (BMG 758)

Coursework

Scenario Planning:

Alternate Labs Limited

Total word count: 4353

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Table of Contents
Chapter 1......................................................................................................................................... 3
Introduction ................................................................................................................................ 3
Background of Organization ....................................................................................................... 3
PESTLE ......................................................................................................................................... 4
Chapter 2......................................................................................................................................... 7
Scenario Planning........................................................................................................................ 7
Info graphic and Description of Worlds ................................................................................ 10
Chapter 3....................................................................................................................................... 14
Recommendations .................................................................................................................... 14
References .................................................................................................................................... 15
Appendices.................................................................................................................................... 17
Reflection .................................................................................................................................. 17
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Chapter 1
Introduction
Even though strategy is one of the primary elements that defines the success of a business, even
the greatest leaders are often confused on what a strategy is and what it is not. Often strategy is
confused with the mission and vision of the business but actually it’s not. While the vision and
mission explain what the business is trying to achieve, strategy explains how those objectives can
be met. According to Watkins (2007),”Strategy is the set of guiding principles that, when
communicated and adopted in the organization, generates a desired pattern of decision making”.
According to him, the strategy of a firm defines how all people in the organization will make
decisions and will allocate the resources to achieve the long-term objectives of the business. A
strategy will have a set of guiding principles based on which the persons prioritize and take
actions. Strategy is not a stand-alone element but is an element that coexists with the mission
vision and value network of an organization (Watkins, 2007). A proper alignment between these
elements together will explain the strategic direction of a business. Likewise, it is impossible to
develop a strategy without considering these elements. A strategy is formulated based on the
objectives of the organization and considering the different network partners associated with the
organization in co-creating and capturing value. While explaining strategy and strategy creation
process Watkins (2007) implicitly states why often strategy fails and why the creation of strategy
is a complex process. Lack of alignment between the elements outlined above and not
considering that elements while creating the strategy could be stated as the reason for the failure
of strategies.
According to Itami and Numagami (1992) Strategy cannot be static and it evolves over time. A
same strategy may not be able to create and capture value in long-term if it’s not adjusted to the
changing circumstances. If a strategy can be successful forever then there is no relevance for
strategic management and it is the major reason for strategic management to get greater
attention in a business context. Developing the most efficient strategy is highly complex and
making the appropriate changes to the strategy based on the changing circumstances is even
more difficult (Idenburg, 1993). Scenario planning is a process that helps to managers to identify
and plan strategies that can be adopted in different future circumstances in future (Lindgren and
Bandhold, 2003). The purpose of this report is to identify strategies suited for Alternate Labs
Limited in different future scenarios. Scenario planning process will be used to determine four
different scenarios that the business need to be prepared of. Identification of these scenarios
and providing recommendations for future strategic development are the key priorities of the
report. A brief background of Alternate Labs is provided in the following section and the
remaining sections deals with the identification of the different scenarios (worlds) and analysis
of these worlds.
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Background of Organization
The company Alternate Labs is a Northern Ireland based Software Company. The company was
established in 2014 by Mr. Peter David Hawkins, Mr. Martin Scott Wylie, and Mr. Colin Terence
Young. Peter and Martin Scott are the current directors of the company (checkcompany.co.uk,
2021). The company is registered as a business and software development entity. Even though
the company was developing software for different global clients, from 2020 onwards the focus
of the company is building own products. Making online commerce more inclusive is the mission
of the firm. The company believes the online commerce need to be highly simple so that anybody
can take part in it. The company is built up on two more core values; small business must be able
to take part in online commerce without hiring dedicated software engineers or agencies and the
ongoing costs need to be minimal. Till now, the company have launched two products;
Payhere.co and nine.shopping. Payhere payments limited is registered as a separate entity and
is registered in the year 2018 (Checkcompany.co.uk, 2021a). Payhere is a payment service that
enables the users to create easy payment links that can be send to the customers through social
media or email or can be placed in their websites. Customers with no background in software
development or coding can use this option with ease and even set-up subscription-based
payments. The service is used in 127+ countries and $7million+ payments processed till august
2021.
Nine.shopping- the second product launched by alternate Labs is an online platform that allows
users to setup their online store just like setting up a social media profile. The target customers
of this product are businesses that sells replenishment products. The platforms allow businesses
to sell their subscriptions of different products. In the basic version the customers can setup up
to 9 products and in the premium version, the customers can set up to 99 products. While in
Payhere the company charges 3% of the transaction amount Plus the stripe fees, in the basic plan
of nine.shopping the company charges only 2% of the transaction fee plus stripe fees. In the
premium plan of Nine.shoppinfg (Nine+), customers have the option to negotiate the service
charge.

PESTLE
PESTLE analysis is a marketing tool that is used commonly by businesses to keep track of the
external factors impacting business. It is a Mnemonic that stands for Political, Economic, Social,
Technological, Legal and Environmental (Perera, 2017). Depending on the industry and other
factors more factors are often added or reduced from this tool. For example, Factors like “Ethical”
are often included to this model. PESTLE analysis will provide a clear vision to the business on the
key external drivers or macroeconomic elements. The following table identifies the different
macro elements impacting Alternate labs Limited.

Political • Global political instability

factors • The government policies related to data protection
• Changes in government policies related to international payments
• Exchange rate fluctuations
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Economic • BREXIT
factors • Covid-19
• Economic Growth
• Disposable income
• Unemployment
• GDP growth
Social factors • Growth of online shopping
• Change in demographic patterns
• Gender roles
• Spending patterns
Technological • Social media marketing
factors • Level of technology acceptance
• E-commerce related infrastructure
• Internet penetration and mobile phone usage
Legal factors • Consumer protection laws
• Data protection and privacy laws
• Intellectual property rights

Environmental • Recycle policies

factors • Influence of climate change
• Carbon emission

PESTLE Analysis discussion:

Political factors
The company process payments from more than 127 countries hence the political instabilities in
different countries will impact on the cross-country payments. Possibilities for additional legal
requirements may impact the business. The government policies related to data protection are
evolving (Zunzunegui, 2018) and can impact the operations of Alternate labs. For example,
policies that restricts storage of User data overseas will force alternate labs to make necessary
storage facilities in particular countries. Exchange rate fluctuations also have high impact on the
business. For example, if majority of businesses registered with the products are operating in UK,
when the value of pound increases, the possibility of foreign purchases may decrease. Similarly,
when the value of pound decreases, international transactions may increase.
Economic factors
Both BREXIT and Covid-19 together pushed UK to the worst recession after the Second World
War, minimizing the disposable income of people and rising the unemployment rates (Revoredo-
Giha and Costa-Font, 2020). The economic growth shrank highly in all economies. A high GDP will
be beneficial for alternate labs as the buying power of customers increase in that case while a
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low GDP growth will have negative influence on the business. The economies are recovering
faster than anticipated which hives better hope to Alternate labs. Hence the GDP growth is a
major uncertainty impacting Alternate Labs and both of its products.
Social factors:
Online shopping has increased in UK and is increasing in most economies (Tarhini et al., 2021).
This changing trend is beneficial for Alternate Labs as with the increase in online shopping more
business may register with different services of Alternate Labs. Gender roles are key in marketing.
When operating in economies with clearly distinguished gender roles and high gender
stereotypes marketing need to be done accordingly to have better results. Consumer spending
patterns changes over time based on several factors including different economic factors.
Alternate Labs will be benefitted by forecasting the spending behaviors based on the various
information available. Likewise, demographic trend is also a key factor. The Population in UK is
ageing and the demands for products catering this segment will be growing. Such trends need to
be monitored. Growth of subscription E-commerce market is a major driver of the business of
Alternate labs. During 2013 to 2018, the subscription e-commerce market has doubled (Chen et
al., 2018). More retailers and manufacturers as well as venture capital funded startups are
entering the market a high pace (Chen et al., 2018).
Technological factors
Due to the wide spread use of social media, effective social media marketing is necessary for
Alternate Labs. The level of technology acceptance, e-commerce related infrastructure including
the delivery networks, internet and mobile phone penetration in different economies need to be
considered while expanding the business.
Legal factors
The data protection laws, consumer protection laws, intellectual property laws etc. varies from
country to country. It is essential to keep track of the different legislations applicable in different
countries and the activities should comply with the laws to avoid lawsuits and associated
damages.
Environmental factors
The growing trend towards eco-friendly products in the different markets and by adopting
ecofriendly business practices Alternate Labs can gain trusts of its customers. Alternate Labs
Limited can opt for getting B-Corp certification and use integrated reporting to make its
customers and stakeholders aware of the commitment of the business towards sustainable
business practices.
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Chapter 2
Scenario Planning
Since no one will be able to predict the exact future, businesses need to be prepared for different
futures. Scenario planning is a strategic management tool used by the strategic planners to
identify and explain different futures and to develop different strategic directions for different
possible futures (Ringland and Schwartz, 1998). Scenario planning helps the business to gain
control over a highly uncertain world by properly identifying the different possible scenarios and
identify the best course of actions suited in the identified futures. Scenario planning helps the
leaders to understand what could happen so that they can be prepared to respond to the changes
(Ringland and Schwartz, 1998). Scenario planning provides a competitive advantage to the firms
as the leaders will be able to respond quickly to the changes as they are prepared for multiple
possible scenarios and will not be required to panic during a crisis as the situation and course of
actions will be documented (Ringland and Schwartz, 1998).
Scenario planning is a complex and time-consuming process which is identified as one of its major
drawbacks (Mietzner and Reger, 2005). Significant effort is needed for scenario planning. The
first stage in scenario planning is identify the focal question and setting a time frame (Ringland
and Schwartz, 1998). For Alternate Labs Limited the focal question for the scenario planning
process is; How the attitude of customers towards subscription e-commerce changes in 10 years?
In the second stage of scenario planning different factors impacting the business are identified
and it is also termed as environmental scanning (Ringland and Schwartz, 1998). All factors
impacting the business including internal factors and external driving forces are identified in this
stage. Internal factors can be identified using SWOT and the external environmental scanning can
be done with the help of PESTLE and Porter’s five forces analysis.
Porter’s five forces

Force Intensity Comments

Threat of New High New entrants may bring innovation and may disrupt the market.
entrants The e-commerce industry is in Growth stage and hence the
number of new entrants will be higher. Low-cost strategies used
by new entrants may increase the pressure on Alternate Labs
limited
Threat of Medium As the number of competitors focusing on the exact target
substitutes could segment are low the threat of substitute can be assessed low. But
increase as the number of new entrants increase threat of substitutes will
to High also increase considerably.
In future
Bargain power Medium, The operations of the business are dependent on the Stripe and
of suppliers could be Stripe have significant bargaining power as the number of
high in alterative options in front of Alternate labs are very low.
future
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Bargaining Medium The subscription e-commerce is gaining momentum but currently

Power of could benot well adopted by the public. As a greater number of customers
Buyers High in embrace the business model and the number of competitors
future increase, the bargaining power of the customers of Alternate
Labs Limited will increase considerably.
Industry rivalry Low, As the number of competitors are low, the industry rivalry is
could be currently assessed LOW. But as the number of competitors
high in increase rivalry will be High.
future

Identifying the key drivers and ranking these identified drivers of change is the next stage in the
scenario planning process. The different key drivers identified from the PESTEL and Porters Five
Force analysis are listed and ranked in the Following table.

Key driver Rank

Number of competitors 1
Adoption of subscription e-commerce 2
Changes in payment technologies 3
Internet and mobile penetration 4
Attitude of businesses towards subscription e-commerce 5
Changes in the rules and regulations 6
Economic conditions 7
Political instability 8

The number of competitors is giving the highest rank as it is highly expected that the number of
competitors will be increasing considerably in the near future as the Subscription e-commerce is
expected to grow significantly. When the number of competitors increase it impacts the
profitability of Alternate labs and both of its products as both products primarily focus on the
subscription e-commerce businesses. Low priced competitors will force Alternate Labs reduce
the transaction fees and the company will be required to spend significantly in marketing both
products.
Creation of different scenarios using scenario matrix is the next stage of the planning process
(Ringland and Schwartz, 1998). It is done be selecting two critical uncertainties along the two axis
of an XY Plain. By constructing the graph this way for each pair of critical uncertainties the
management will get four scenarios. Each quadrant of the graph denotes a scenario which is
normally termed as worlds as shown in the figure below.
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Figure 1: scenario matrix (source: lecture slides)

For the scenario matrix creation, the following critical uncertainties are selected.

• Critical uncertainty 1: Adoption of Subscription E-commerce

• Critical uncertainty 2: Number of direct competitors for Alternate Labs Limited

A scenario matrix is created by taking Critical uncertainty 1 in y axis and critical Uncertainty 2 in
the X axis which is provided in the Figure below.

Figure 2: Scenario Matrix of Alternate Labs Limited (source: self)

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Info graphic and Description of Worlds

Word 1: Mature world
In word 1, both adoption of subscription e-
commerce and number of competitors are high.
This world is the representation of the maturity
stage of the industry life cycle and hence this world
is names mature world. In this stage the industry
reaches the saturation point. At this stage,
competitive rivalry will be medium as it is highly
likely for the businesses to collaborate and make
collective decisions to protect the businesses.
Reduction of rivalry will be a primary concern of
businesses. Since the demand of the customers
are high and stable, business will be able to realize
maximum revenue and profits in this stage but
only a little scope for further growth in the existing
market. The reason for the assumption is that,
when subscription e-commerce is well adopted by
the public more businesses will be offering such
services and there is high possibility for having a
stable and high volume of business customers for
both the products of Alternate Labs Limited. The
market will be led by established players and the
products and services will be popular among the
customers but the prices need to be highly
reasonable else the possibility of losing customers
will be high. Since the competitive rivalry will be
low the Bargaining power of customers will be
medium as most of the business will be providing
standardized services. Hence it is less likely for the
customers to get exciting offers.
In this scenario, The Company can consider
options to minimize the costs to increase
profitability. By becoming the cost leader, the
company can take better profits than the
competitors as the prices will be almost identical
between the service providers.
Figure 3: Info Graphic of World 1: Mature World
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World 2: Monopoly
In world 2, the number of competitors will be
low and adoption of subscription e-commerce
will be high. When the adoption of
subscription e-commerce is high more
businesses will be choosing to provide
subscription products. Since the number of
competitors will be less in this world,
Alternate labs can expect high volume of
business customers and hence the company
will be generating higher revenue and higher
profits. The Bargaining power of buyers will
be less as the number of competitors is less in
this scenario. Alternate labs need to be
prepared for handling huge traffic in this
world. Enhancing the quality of the service
offered, providing better customer
experience etc. can be the primary
considerations. This stage closely seems like
the growth stage of the industry life cycle.
While passing through this stage the
competition gradually increases. The threat of
new entrants will be medium to high. Even
though the company can follow a premium
pricing strategy, the company need to be
prepared of adopting different pricing
strategies to match with the competition as
low-priced competition from new
competitors can be expected any time in this
specific scenario.

Figure 4: Info-graphic of World 2: Monopoly

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World 3: Lacking customers

In world 3 number of competitors and
adoption of subscription E-commerce will be
low. Since the adoptions of subscription E-
commerce is low in this world, business will not
be much interested in providing Subscription
products to the customers. Hence the
possibility for getting customers from the
current target segment will be lower in this
world. A possible action in this world is to
redefine the target segment. Instead of
targeting subscription e-commerce businesses
the company can target on one-time payments
options or any other options.
Company can invest heavily on marketing in
this stage to create awareness about the
business model and its benefits. In this stage
the bargaining power of the buyers will be
extremely high as the businesses will be
hesitating to develop subscription products.
Providing exciting offers and benefits to the
businesses will be able to motivate the
customers to tryout the business model. Most
probably the company will be draining money
in this world and will be reporting a net loss.
Minimizing the cost and enhancing operational
efficiency will enable the company to minimize
the loss. Outsourcing non-key business
functions to low cost overseas destinations will
help the company to minimize the costs.
Minimizing the costs with the help of
technology can also implemented. Use of chat
bots instead of employing large number of
customer service employees, trying to get
better deals from the suppliers etc. will help
the company to minimize costs. To recover the
costs the company can choose a cost-plus
pricing strategy if possible.
Figure 5: Info-graphic of world 3: Lacking customers
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World 4: Not ready world

In this world, adoption of subscription e-
commerce is low and number of competitors
will be higher. The company cannot expect
any profit in this world as the competitive
rivalry will be extremely high in this world. As
objective of the firm is to attract the
customers who are not ready to introduce
subscription products high promotional
expense is common in this world. Companies
that are heavily backed by venture capital
firms who are capable of burning enormous
amount of cash will be able to survive in this
world. The bargaining power of buyers are
extremely high in this world. In short, this
world will be a “do or die” scenario for
Alternate Labs limited. A possible option for
alternate Labs is to find some venture capital
firms or any other source for heavy
investments and be prepared for burning
some real cash. In this world the threat of
new entrants will be lower but the
competition will be heavy. Cost reduction is
highly important in this world. Strategies like
outsourcing the non-core functions might be
beneficial in this world. The situations seem
like the Introduction stage in the product life
cycle.

Figure 6: info-graphic for world 4: Not ready world

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Chapter 3
Recommendations
As the assumptions on World 1 seems like to the mature stage in the industry life cycle. Strategies
suited to implement in the maturity stage need to be developed for this particular world.
Diversification strategy identified as a suited strategy in Maturity stage of the business life cycle
(Cahyo et al., 2021). The business can enter new markets with new products. Which means, in
order to prepare for this particular world, Alternate Labs must be closely monitoring the industry
and must be well equipped with new products and must be aware of the potential markets to
implement the strategy as early as possible when scenario 1 happens. A major reason for
choosing this strategy in World 1 is that if the business tries to attract more customers by
providing competitive pricing or by means of any other tactics, the competitive rivalry becomes
elevated and it will minimize the profitability of the business. It will be fruitful to consider
entering to markets that are passing through the early stages of the industry life cycle with the
existing offerings to increase the overall revenue of the firm.
In world 2, as the number of competitors is less and the adoption of subscription e-commerce is
high, the bargaining power of buyers will be medium. So, it is recommended to follow premium
pricing strategy. It is also recommended to enhance the products and the quality of the services
to increase the customer base. Differentiation on the basis of quality of the product is highly
recommended in this stage. Shorter processing times, attractive refund policies etc. can be
considered. While passing through this world the company must be prepared for increased
competition as the threat of new entrants will be very high in this stage.
In world 3, as the number of competitors and adoption of subscription e-commerce is low the
power of buyers is extremely high and hence it is recommended to follow a cost-plus pricing
strategy. Also, it is recommended to target other customer segments other than subscription e-
commerce businesses to generate a better cash flow. While reviewing the scenario it can be
observed that the market penetration strategy outlined in the Ansoff Matrix is also applicable in
this world (Hussain et al., 2013). The business can gain more customers by developing the current
position in this world.
In world 4, the primary recommendation is to be prepared to face the high promotional expenses.
It is recommended to secure heavy investments to survive and grow in this scenario. Even though
the company will not be able to generate any profits in this word, the customer base can be
significantly enhanced which will be beneficial to the firm on long term.
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References
Cahyo, H., Kusuma, H., Harjito, D.A. And Arifin, Z., (2021) The relationship between firm
diversification and firm performance: Empirical evidence from Indonesia. The Journal of
Asian Finance, Economics and Business, 8(3), pp.497-504.
Checkcompany.co.uk (2020) ALTERNATE LABS LTD - BELFAST. Available from:
http://www.checkcompany.co.uk/company/NI628282/ALTERNATE-LABS-LTD [Accessed
2 August 2021].
Checkcompany.co.uk (2020 a) PAYHERE PAYMENTS LTD - BELFAST. Available from:
http://www.checkcompany.co.uk/company/NI654984/PAYHERE-PAYMENTS-LTD
[Accessed 2 August 2021].
Chen, T., Fenyo, K., Yang, S. and Zhang, J. (2018) Thinking inside the subscription box: New
research on e-commerce consumers. [Online] available from:
https://www.mckinsey.com/industries/technology-media-and-
telecommunications/our-insights/thinking-inside-the-subscription-box-new-research-
on-ecommerce-consumers# [Accessed 10 August 2021]
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A. (2013) ANSOFF matrix, environment, and
growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
pp.196-206.
Idenburg, P.J. (1993) Four styles of strategy development. Long range planning, 26(6), pp.132-
137.
Itami, H. and Numagami, T. (1992) Dynamic interaction between strategy and
technology. Strategic Management Journal, 13(S2), pp.119-135.
Lindgren, M. and Bandhold, H. (2003) Scenario planning. London: Palgrave.
Mietzner, D. and Reger, G. (2005) Advantages and disadvantages of scenario approaches for
strategic foresight. International Journal of Technology Intelligence and Planning, 1(2),
pp.220-239.
Perera, R. (2017) The PESTLE analysis. Nerdynaut.
Revoredo-Giha, C. and Costa-Font, M., (2020) The UK economy is recovering from the pandemic
shock but not all is rosy. LSE Business Review.
Ringland, G. and Schwartz, P.P. (1998) Scenario planning: managing for the future. John Wiley &
Sons.
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Tarhini, A., Alalwan, A.A., Al-Qirim, N. and Algharabat, R. (2021) An analysis of the factors
influencing the adoption of online shopping. In Research Anthology on E-Commerce
Adoption, Models, and Applications for Modern Business. pp. 363-384. IGI Global.
Watkins, M. D. (2007) Demystifying Strategy: The What, Who, How, and Why. Harvard Business
Review.
Zunzunegui, F., (2018) Digitalisation of payment services. Ibero-American Institute for Law and
Finance Working Paper, (5).
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Appendices
Reflection
I have heard about the term strategy and have familiarized with it through different subjects
including marketing, innovation and entrepreneurship and more. Even then, just like many
others, I was confused strategy with the vision and mission of the organization and didn’t have a
clear idea on what a strategy is and what are its components and how to develop one. The ideas
I had was very vague. But the subject learning helped me to clearly distinguish a strategy from
other aspects of the business. Now I clearly know what is vision and mission and what is a
strategy? While the vision is the long-term objective of the organization, strategy of an
organization outlines how the organization will achieve that objective. I became aware of
different levels of strategy and the importance of alignment between the different strategies. For
example, the marketing strategy and operational strategies need to be aligned with the corporate
strategy for achieving the vision of the organization.
A well-defined and well-communicated strategy guides people in the organization to make
decisions. People will clearly know what will be a right decision and what will be a wrong decision
under certain circumstances. The assignment was exceptionally engaging and was one of the
most interesting part of this module. The assignment helped me to understand the importance
of strategic planning and provided me insights on how to develop strategy. I have developed
marketing strategies and provided recommendations on strategic directions in many other
subjects earlier. The main difference was that in those assignment I considered only one possible
scenario. I completely avoided the alternative scenarios. In fact, I was not aware of the
importance of considering alternative scenarios.
The scenario planning process made me understand that an organization may have to face
multiple scenarios. it is impossible to predict which scenario will be facing by the organization in
future. Hence the organizations need to be prepared for most of the scenarios. Just by using two
critical uncertainties I got four different worlds which are entirely different and required different
strategic approaches. Since there are a number of other uncertainties, the number of scenarios
for Alternate Labs Limited are infinite. Even though it might not be possible to be prepared for
every alternative scenario, organizations can identify the most probable scenarios and scenarios
with high impacts and be prepared for those scenarios.
I think the knowledge I gained from this module on strategy, strategic planning and scenario
planning has enhanced by ability to develop efficient strategies which will be definitely useful for
me in my career. Currently I am confident that I can be part of discussions on strategy planning
impacting a firm and I will be able to contribute much in the discussions. The knowledge and skill
I gained on the development of Info-Graphic are unexpected and I see it as highly valuable and
will be looking forward to develop my skills on the same.