Future-proof strategies: What-if analysis to anticipate changes

"What would happen to our logistics costs if within five years turnover in Asia increased by 25%?" or “What is the impact on margins if production costs in China increased by 15% due to new regulations?”.
What-if analysis is an essential tool for exploring hypothetical scenarios and anticipating the impact of long-term business decisions. Traditionally, many companies rely on static models to analyse historical data and project the future. This approach, however, risks failing to take into account the complexities of modern markets, where geopolitical, technological and economic variables change rapidly.
Key strategic decisions, such as expanding into new markets or realigning resources, can benefit enormously from what-if analysis.

With the advent of artificial intelligence (AI) and probabilistic simulations, what-if analysis has turned into a powerful strategic planning tool. Thanks to modern decision intelligence software, companies can perform dynamic simulations that incorporate economic, technological and political variables in real time. Using predictive algorithms and complex models such as Monte Carlo simulations, it is possible to accurately assess the likely impact of various scenarios.
For example, if an energy company is considering investing EUR 500 million in renewables, it could use what-if analysis to answer questions such as "How would our margins change if the price of oil collapses by 30 per cent in the next two years? “ or ”What would be the impact on revenues if the adoption of renewable energy in emerging markets grows 20 percent faster than expected?". In this way, the company can compare different scenarios and make more informed decisions.

• Real-time forecasting: Companies can make strategic decisions based on up-to-date data, ensuring more accurate and reliable forecasts.
• Risk reduction: Simulating multiple scenarios allows companies to assess risks related to economic, regulatory and market factors and develop plans to mitigate them in advance.
• Resource optimisation: Identifying the scenarios with the greatest positive impact allows company resources to be allocated more efficiently, improving overall effectiveness.

What-if analysis can be applied in a variety of strategic contexts, including, as example:

• Expansion into new markets: A food company might ask: ‘If we were to enter the Asian market and 15 percent of our global sales were to come from there within five years, how would this affect our supply and distribution chain?’. The what-if analysis would allow the company to simulate various growth scenarios, assessing operational costs and associated risks.
• Investment in emerging technologies: A technology company could use What-if analysis to simulate the impact of significant investments in new technologies, asking, ‘What would be the impact on long-term turnover if we invested EUR 100 million in artificial intelligence over the next five years? “ or ”How would a 15 per cent reduction in technology costs over the next three years affect overall profitability?’. These simulations help to assess the return on investment and to plan development strategies.
• Portfolio diversification: An energy company considering diversifying its product portfolio towards renewable energies might ask: ‘What impact would a 20 per cent increase in solar energy investments have on global revenues over the next ten years? “ or ”What would happen if the price of oil dropped by 30 per cent within two years?’ What-if simulations provide a clear view of how such decisions could affect long-term performance.

What-if analysis, powered by AI and probabilistic simulations, is not only a strategic tool: it is a concrete compass to guide companies through the most complex and critical decisions with greater confidence and precision. Unlike traditional what-if analyses, where the element of uncertainty - the ‘if’ - has to be assumed manually, WhAI, Vedrai's Decision Intelligence platform, thanks to the integration of external variables and real-time market dynamics, already offers an indication of the most realistic values to consider.
For example, if one asks ‘What would happen to our logistics costs if turnover in Asia were to increase by 25% in the next five years?’, Vedrai not only calculates scenarios, but can also indicate how likely that increase is, further reducing uncertainty and steering decisions towards a real-world data-driven approach.
With WhAi, companies can finally move beyond the logic of simple assumptions and adopt predictive, evidence-based decision-making. Get ready to make more informed decisions by relying on an approach that not only answers the question ‘What if?’, but also suggests ‘What's likely’. Find out more about WhAI and request a demo.