Force Field Analysis and Scenario Planning (Cambridge International A-Level Business)

Force field analysis

• Force field analysis involves managers identifying the driving and restraining forces that surround a strategic change decision

  • Once identified these forces can be analysed to determine whether a decision should go ahead

Driving forces

• Driving forces are factors that could justify that strategic change is needed

  • Internal driving forces may include:

    • Outdated machinery or product lines
    • Declining team morale
    • The need to increase profitability

  • External driving forces may include:

    • A volatile market
    • Disruptive technologies e.g. AI
    • Changing demographic trends

Restraining forces

• Retraining forces are factors that could prevent or limit change

  • Internal restraining forces may include:

    • Fear of the unknown
    • The existing organisational structure
    • "That's not how things are done here" attitudes

  • External restraining forces may include:

    • Existing commitments to partner organisations
    • Government legislation
    • Obligations towards customers

Weighting the forces

• Driving forces and restraining forces are weighted from 1 to 5 in terms of their relative importance

  • A value of 5 is most important and 1 least important

Example force field analysis

A simple example of a force field analysis

• In this case, four driving forces justify a decision for change

  • Their weightings are 5, 4, 3 and 2
  • The total value of these driving forces is 5 + 4 + 3 + 2 = 14

• In this case, four restraining forces prevent or limit change

  • Their weightings are 4, 3, 2 and 1
  • The total value of these restraining forces is 4 + 3 + 2 + 1 = 10

• The relative weight of driving forces is greater than the relative weight of restraining forces

  • There is a good chance that this decision would be successful
  • To maximise the chance of success, driving forces could be strengthened or restraining forces weakened or eliminated

Worked Example After several years of poor financial performance, the owners of Lujosa Ltd are considering the relocation of their factory from Spain to Indonesia.

Department managers have provided feedback on the idea. They have identified the following driving and restraining forces.

Force	Description	Weighting
Driving	- Need to reduce production costs to increase profitability	5
- Outdated production machinery in Spanish factory affects volume and quality of output	3
- Difficulty of recruiting and retaining skilled employees in Spain	1
Restraining	- Costs of relocation including construction and fitting of a brand new factory in Indonesia	4
- Employee resistance to job losses	2
- Disruption to production during the change period	4

(a) Use force field analysis to determine whether Lujosa's owners should go ahead with the decision [4]

Step 1: Construct the force field analysis

[1]

Step 2: Calculate the relative weight of driving forces

$=5+3+1\,\,=9$ [1]

Step 3: Calculate the relative weight of restraining forces

$=4+2+4\,\,=10$ [1]

Step 4: Compare the relative weights of driving and restraining forces

• The relative weight of restraining forces (10) is greater than the relative weight of driving forces (9)
• There is little chance that this decision would be successful and should be abandoned

[1]

(b) Identify two actions Lujosa's owners could take to allow the move to Indonesia to go ahead [2]

• Relevant actions include

  • Outsource production during the relocation process
  • Research ways to reduce costs of building and fitting of the new factory
  • Consult and engage with workers to reduce fears of redundancy

[2]

Evaluating force field analysis

• Force field analysis is a valuable technique for assessing the factors influencing a situation
• However it has limitations, particularly in situations where precision is required
• It is most effective when used alongside other decision-making tools to ensure a comprehensive understanding of the situation

Scenario planning

• Scenario planning is used to prepare for different possible futures

  • Rather than predicting exactly what will happen, a company imagines several plausible “what‐if” situations

    • E.g. a sudden change in the law, a new competitor entering the market or rapid shifts in customer tastes

  • Leaders can spot early warning signs and act before problems or opportunities become urgent.

• It involves asking a series of linked questions

Scenario planning questions

The benefits of scenario planning

• Helps avoid surprises

  • Rather than being caught off‐guard, the company has thought through several possibilities in advance and may, therefore, have something of a plan

• Focuses on flexibility

  • Instead of committing to one rigid plan, the firm builds capabilities, such as adaptable suppliers or skills training that help in multiple different futures

• Improves decision‐making

  • Teams practice 'if‐then' thinking, such as 'If oil prices double, then we switch to electric vehicles in our fleet'
  • This makes real choices easier when change happens