Faced with a scenario of restrictions on technology imports in Argentina, a leading global company in the manufacturing and sale of computers asked us for help to make a series of decisions in a short time with its executive team in the US corporate. 

By working together, we were able to design a contingency strategy that enabled the reduction of risk and structuring of a plan that would potentially capture new opportunities going forward. In order to achieve this, the probabilistic modeling of all the scenarios the different actors were perceiving in a dynamic model was essential, which allowed them to decide in very short times. 

Context

In contexts of high uncertainty, it is not only difficult to assign probability to scenarios, but sometimes, it is very complex to even know what the variables that could affect the decisions will be. 

Our client, an American technology company with operations in Argentina dedicated to the manufacturing and sale of hardware and software knew this very well but needed to be prepared for what was about to happen. It was a turbulent context at political level in which the government, close to ending its administration, promoted a law that would prohibit any import of technological products, pushing all global companies into the red in a few months. 

Faced with this situation, they contacted us with the objective of helping them to structure the different decisions with the risks foreseen and, at the same time, to put together a model that could be used to speak with the corporate “live” and make the necessary decisions together. 

Approach

The first challenge was to be able to distinguish the different decisions that had to be put on the table, with their alternatives and associated risks. What was at stake was not inconsequential; the business could collapse in the event that importation was prohibited. 

Among the decisions, those with the longest term and investment were identified, as well as different development possibilities to be able to achieve local products in a short time (setting up a factory, associations, etc.) and thus gain large market shares. It was also necessary to evaluate short-term decisions, such as anticipated product purchases (overstock) in the face of different scenarios of implementation times of the measures.  

Uncertainty analysis was crucial as the model was highly sensitive to assumptions and probability estimates. For this reason, we proposed developing a dynamic model that could be nourished by the visions of the different stakeholders in order to see how the results played out and to be able to decide together by adding points of view. 

Results

Finally, the decision was made in the meeting with the corporate using the model developed by Tandem, which gave the decision a lot of robustness. The company decided not to open the factory, but instead fast-forward the import of a lot of product in order to ensure an advantage over the competition in case the import closed from one day to the other. Our client was pleased with the results of the decision and obtained great external credibility for future decisions in which external support was required.