What scenario illustrates the objectives of what-if analysis?

The scenario that truly embodies the objectives of what-if analysis is the adjustment of budget forecasts based on varying market conditions. What-if analysis involves examining different potential outcomes based on varying inputs or assumptions. In this context, adjusting budget forecasts allows analysts to explore various scenarios, such as changes in market demand, costs, or economic conditions. By modeling these different situations, decision-makers can understand how sensitive their forecasts are to changes in the market environment and strategize accordingly.

This approach helps organizations make informed decisions, manage risks, and allocate resources effectively by visualizing the potential impacts of different scenarios on their budget. It empowers businesses to prepare for uncertain future conditions by forecasting multiple potential realities rather than relying on a single linear projection.