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Key Business Analytics by Bernard Marr

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4

Scenario analysis

What is it?

Scenario analysis, also known as horizon analysis or total return analysis, is a method of projection. It is an analytic process that allows you to analyse a variety of possible future events or ‘scenarios’ by considering alternative possible outcomes.

By planning out the detail required to implement a particular decision or course of action you can observe not only the final potential outcome but also the viability of the path leading to that outcome. Often it’s only when you really consider what would be involved in the actual implementation of an idea that you fully appreciate the scope of that idea. Scenario analysis therefore allows you to improve decision making by fully considering the outcomes you expect ...

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