STRATEGY UNDER

UNCERTAINTY

Submitted by Group 5
Anusha Surisetty
B R Kavya Maheshwari
Neeraj Krishnan
Rahul Pillai
Saujanya S
Vineet S
WHAT IS UNCERTAINTY
● A situation which involves unknown or imperfect information

WHAT IS THE TRADITIONAL APPROACH TOWARDS THEM

● Traditionally Uncertainty is viewed as either certain or uncertain

● This leads to underestimating uncertainty and in turn taking the wrong

decision

● On the other hand external uncertainty causes decision makers to rely

on gut instinct

WHAT IS THE SOLUTION

● A structured decision making approach that quantifies uncertainty based on existing

conditions
 4 LEVELS OF UNCERTAINTY
LEVEL 1 - A CLEAR ENOUGH FUTURE LEVEL 2 - ALTERNATE FUTURES

● Residual uncertainty is negligible ● Few discrete outcomes

● Single precise forecast ● Cannot predict which outcome would

occur
● Traditional strategy approach possible
● Use decision analysis to select one
LEVEL 3 - RANGE OF FUTURES LEVEL 4 - TRUE AMBIGUITY

● Range of outcomes ● Multiple uncertainties interact

● Actual outcome lies between the ● Not possible to determine range of

range outcomes

● Each outcome requires separate ● Rare situation and may migrate to

analysis below levels over time
 3 strategic postures vis-a-vis uncertainty

Shape the Future Adapt to the Future Reserve the right to play

● Establish their leadership ● Speed, Agility, & Flexibility ● Avoid Premature commitment
role in the industry.

● Set standards & create ● Existing market: Capture ● Invest sufficiently

demand Opportunities
 3 Moves vis-a-vis uncertainty

No-regrets Moves Options Big Beta

● Strategic Decisions ● Yield Significant positive ● Focused with positive payoffs

playoff in 1 or more scenario

● Positive playoffs in any ● Mix of positive & (small) ● Few negative effect in others
scenario negative payoffs
 Strategies Formulation

Level 1’s: Clear Enough Future Level 2’s: Alternate Futures

● Predict industry’s future landscape ● Shapers: Capital Intensive industry

● Build new capacities or consolidate through

● Making positioning choices M&A

Level 3’s: Range of Futures Level 4’s: True Ambiguity

● Move the market in a general ● Greater uncertainties

direction

● Limited range of possible outcomes ● High return & lower risk