Foreseeing Iron Ore Prices Using System Thinking and Scenario Planning

• Published in: Systemic practice and action research Vol. 27; no. 3; pp. 287 - 306
• Main Authors: Morandi, Maria Isabel Wolf Motta, Rodrigues, Luis Henrique, Lacerda, Daniel Pacheco, Pergher, Isaac
• Format: Journal Article
• Language: English
• Published: Boston Springer US 01-06-2014; Springer Nature B.V
• Subjects: Acceptances; Analysis; Business and Management; Commodity markets; Commodity prices; Forecasting; Industry; Iron compounds; Markets; Methodology of the Social Sciences; Mining industry; Organization; Organizational change; Original Paper; Prices; Research methodology; Sociology; Studies; Subsidies; System theory; Visualization; Systems thinking; Scenario planning; Pricing; Commodities
• ISSN: 1094-429X; 1573-9295
• DOI: 10.1007/s11213-013-9277-9

In competitive and complex markets such as the commodities one, having the ability of planning scenarios and envisioning the behavior of prices in each of them, constitutes a competitive advantage for organizations. Within this context, this research aims at developing a method for the understanding of the key factors that impact the pricing of commodities through a systemic approach, allowing the estimation/evaluation of future prices in different scenarios. Action research was used as research methodology, which is characterized by the principles of collaborative and continuous learning. In order to implement the objectives of this research, an adaptation of the Systems Thinking and Scenario Planning method was developed and implemented in an industry of the iron ore market. The first phase led to the understanding of the main variables associated to the price; in the second phase, this learning was materialized in a system dynamic computational model, which was used in the third and final stage for the estimation/evaluation of future prices in some alternative scenarios. Interviews were conducted in parallel with the quantitative evaluation, in order to obtain subsidies for acceptance and refinement of the proposed method. The results obtained, the learning reported and the possible applications identified for the use of the model indicate that the proposed method allows for the understanding of the pricing of commodities through the systems thinking and the planning by scenarios.