RESPONDING TO THE ENVIROMENT
In order to handle the environmental uncertainty organization have several ways respond to the environment.
1. Adapting the environment
2. Influence the environment
3. Selecting the new environment
Adapting the Environment
Due to change in economy, use of internet in business, globalization, customer needs, and wants, cost issues, competitors and changing trends organizations are cant able to handle the level of environmental uncertainty. In order to dynamically adapt the changes in the environment businesses have to change their processes, work procedures, polices and organizational structures. In most of the organization we have centralized structures and the business to take any step should take permission form the executives or higher level management but now the scenario is changes if you are not able to respond to the environment in time you are dead. In order to cope with complexity this rises as the result of uncertainty the organization have to adapt decentralizing decision making.
Example: The Company operating in different cities of Pakistan says Mobilink . Every city customers have different demands like in Karachi people want to use the internet using their mobiles so the company has to provide the GPRS service but in Khuzadar people are not familiar to Internet and their need is to communicate using calls so the company doesn’t needs to provide the service. The customer demand varies so the managers of every city want to take decision and have authority to take decision which benefits the company. In order to do that organization have to share the power with employees in order to raise their confidence is known as empowerment.
In response to uncertainty cause by change dynamism in the environment organization tend to established more flexible structure in today’s business world it is common place for the term bureaucracy to take on a bad connotation. Most of that recognized bureaucratic that organization tend to be formalized and very stable and while bureaucratic organizations may be efficient and controlled if the environment stable they tend to be slow moving and plodding when products, technologies, customers, compotators and the like start changing over time in these cases more organic structures tend to have the flexibility needed to adjust to change.
Adapting at the boundaries
Organization may operate at city, region, country and international level not able to predict when will be the demand of the product increases or decreases it because of the uncertainty.
So in order to cope with this problem organization create buffers on both input and output sides of their boundaries. The organization has some type of contract with employment agencies.
Example: When new students take admission in PAF-KIET most of them need transport facility. That’s the reason PAF-KIET maintain the agreement with Transporter to make sure the buses and drivers are available when the institute needs.
At the output side the organization keeps some type of ending inventory that allow them to keep merchandise on hand in case of rush hours when the demand for the particular product increase and also when the particular resources are not available.
Example Book store, automobiles dealers, manufacturing companies, fast food restaurants make use of buffers
The organization also uses the concept of smoothing in order to control the level of fluctuation at the boundaries of the environment.
Example: Cold drink companies always reduce your prices during winter session in order to control the level of fluctuation of sales.
Adapting at the Core
To manage with the environmental uncertainty companies adapt the flexible processes at the core level. The flexible processes increase the availavbility of product or service when the customer needs. If company not able the customers requirements on time it they will move to buy the products of your competitors.
Example If Nokia have only made two types of mobiles which prices are quite high how other people can buy it.
• The mobile is not affordable.
• Customer choice is different
• The mobiles are small they like larger mobiles or vice versa
These are the issues that organization has to recognize and try to solve it so by adapting flexible processes at the core Nokia is able to produce different type of mobiles which fulfill the diverse needs of customers.
Influencing your environment
Proactive responses aimed at changing the environment
Independent action – Strategies that organization acting on its own uses to change some aspect of its current environment.
Example Ufone offered free connection in order to increase number of customers.
Cooperative action – Strategies used by two or more organizations working together to mange the external environmental an organizational level, establish strategic alliances.
Example Different universities members make the decision to which specialization programs should be offer for the students which will help them in future and generate profits for the institute.
Changing the Environment you are in
Some organization always make efforts in order to change the boundaries of its task environment known as strategic maneuvering it means when the companies see potential in any area it try to switch to that business or continue the current business and acquire the new business..
Types of Companies
Prospectors – companies that continuously change the boundaries of their task environments by:
Seeking new products and markets
Diversifying and merging
Acquiring new enterprises
Defenders – companies that stay within a stable, more- limited product domain as a strategic maneuver