Environmental Uncertainty Is A Forever Topic In Business World

1708 words - 7 pages

IntroductionEnvironmental uncertainty is a topic that has had furvent focus from organizational theorists for over three decades. "Firms in every industry have come across increased environmental uncertainty and rapid changes in their external environments" (cited in Castrogiovanni 2002). As the changing environment creates new challenges that require senior managers to responses on different levels depending on the degree of involvement in the market. Recent research defines environmental uncertainty into three key dimensions which include capacity, stability and compelexity. This essay will discuss the impact of these three key dimensions on the management of an organisation. Also, some suggestions are put forward, which organisations could use to respond to environmental uncertainty.Reason 1: instability environment makes business hard to survive."Environments directly affect organizational outcome, which in turn affect subsequent perceptions and decision" (Scott p147 1998). Uncertainity of the external environment will leave some managers lost in the fog. In October 2008, the US started the current financial economic crisis and later spread globally, hit Eurpoe badly, finally Oceania is involved. As consumers spend less money, senior managers have to face to the uncertain business environment. Furmore, managers will not only face the downturn's depth and duration, but there's a big unknow question that pushes them to reconsider their current business plan, wondering whether or not the current plan will let the organisation get through the recession time or not. In normal time, a small mistake in budgeting or planning will be easily overtaken by large amount of customer consumption. But this is not a normal time, even Woolworths in the UK was bankrupted by their marketing strategy. Many companies acted immeditely at the end of 2008, slow investment, laid off employees, cut unnecessary spending and so forth. However, these actions only can show them the results in short-term, not a long term plan for survival in this difficult circumstances.Reason 2: Complex environment makes future hard to predict.Regardless size of a firm, information technology has dramatically changed the nature way of running business, every firm is able to enter the world market rapidly and compete effectively. At the same time, customers are easily to receive latest technology and new products. Once a new innovation has been declared to public, it will spread rapidly from one country to another. The author believes the technology changes dramatically that makes overseas market more uncertainty and more unpredictable. For example, goods delivery time for firm A is four weeks, but firm B is producing same products which can deliver to customer in 1 week. Of course, some of the customers will change to firm B if they need the product urgently. "In some markets, the firm may differentiate its products, to beat competition while in others it needs to focus on cost leadership,...

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