Business Management - Environmental Uncertainty

Introduction

The environment can be a huge influence factor in every companies. It has a characteristic is uncertainty because the environment is affected by the company’s environment, the resources and the change. The environment include two parts: general environment and the specific environment. Each if these environment can influence the managers and organization by many different way. Reflecting Daft and colleagues' assertion that ‘a single environmental measure may not be a useful way to understand how the environment influences organizational actions’(Daft,1988). So it is important to know what cause the environmental uncertainty.

Firstly, the environmental uncertainty can be grouped into three main categories (1)perceived environmental uncertainty (2)effect uncertainty (3)response uncertainty (Milliken, 1987). Managers do not know what kind of change has already happened. They can not make sure that this change will affect the organization. Therefore, the managers in different level should pay more attention on demanding, supplying, competition and the affects of external factors. Managers must measure and monitor decision outcomes, this is ‘an important first step in maintaining attention to critical strategic issues’(Shimizu & Hitt,2004). This essay will show out the sources of environmental uncertainty, the influences which environmental uncertainty made to managers and organization and the way to minimise these impacts.

Body

Environmental uncertainty can be affected by many elements, such as systems theory and organizations. These two parts will connect with each other and achieve a common purpose. Among organizations have five components: inputs, transformation process, outputs, feedback and the environment. As a result, if the environment has changed the organization will be affected. For example, the most employees in company has been replaced, the managers do not understand their staffs and can not give each of them the most appropriate work. The work and the plan will be difficult to finish. This example shows that the internal environment will affect the organization and affect the process of company further. Therefore, the resource of the environmental uncertainty is very important for company to reduce this character.

First source is demand uncertainty, it means the company can not make sure the products’ requirement in that place is high or not before they build the market. It is hard for managers to make the decision about the size of market and how to sale the products can be accepted by customers. The manager must try their best to make the company get the profit as more as they can. They may go to that area and do some market survey. It will help the company realize the demand of products in that place and reduce the risk to set up shop. Then the demand uncertainty will be minimized.

Secondly, supply uncertainty is a main source. The suppliers is a part of specific environment and it may changed quickly. The suppliers which provide the products to company not only provide to one company, so if they make the mistake and give the company other company’s products it will disrupt manager’s plan. The managers have to solve the problem first and make the new plan. It will waste many time and may cause a great loss for company. Therefor, the supply uncertainty can not be ignored.

Next source is competitive uncertainty which means the competition come from internal and external. The internal competition can caused by the new employee or the capable staffs. Sometimes they maybe forget the team spirit and only care about show out their ability. It will hinder the reach company’s goals and also affect the organization. The external competition most of time is from the competitors. For example, when the company create a new product and sales well. The competitors may imitate the originality and produce the similar products and make the price lower. Meanwhile, the competitor may advertise goods for sale. So the company should consider about the how to deal with this situation before publish the products. The competitive uncertainty should be valued.

The final source is the effects of external factors, such as the social pressure and the government intervention(Regan,2012). The society always keep a watchful eye on the ethic and the responsibility. When the company is not ethical in one day, then it will not be accepted again. For example, the Sanlu Group made the milk which is tainted with melamine caused many baby died. This event make the public strongly condemn the company’s behavior. Even other formula companies in China were not be trust any more. The responsibility is also very important for the company. It will help the company to be sustainable more easily.