In a Highly Dynamic and Turbulent Environment free essay sample

In a highly dynamic and turbulent environment, some mangers of organizations seek to plan their change strategy in the light of circumstances, whilst others have change thrust upon them. Therefore, it benefits all mangers to obtain a better understanding of the relationship between the organization and its environment and react accordingly. Introduction The purpose of this article is to evaluate the statement above and discuss the skills a manager might need to be successful in a increasingly fast changing and growing complexity business environment. No matter what form of the organization that you work for, for example, a profit making company, a public sector bodies or voluntary charitable group. We all have been experiencing the impact of the environment that surrounding organization. Accordingly, studying the environment and managing the impact are essential to survive or gain competitive advantage. Changing School of Management Thought Before we talk about the environment, I would like to briefly exploring some of the major schools of management thought. We will write a custom essay sample on In a Highly Dynamic and Turbulent Environment or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This is important to know that not only the environment is changing rapidly, but also the way we see the world is shifting. Each of the schools of thought, in their day, represents the major paradigms and reflects the business environment surrounding them in their eras. These schools of thought are the ‘paradigms’ of management referred to by Clarke and Clegg in their book â€Å"Changing Paradigms – The Transformation of Management Knowledge for the 21st Century. †(Clarke Clegg, 2000) . Since â€Å"Clarke and Clegg define paradigms as models or frameworks that we use to help us perceive, perceive, understand and interpret the world around us. † (R A Cowe BmiC Lec1, 2008). We can understand the change happens in business world by studying different schools of thoughts and paradigms in different time. Thus we can compare the complexity of nowadays environment with early year environment. The major schools of management that we need to recognize are Scientific Classical (administrative) Behavioral Systems and contingency approaches Scientific School views management as a science and belief that there is only ‘one best way’ to run a business, whilst mangers are able to identify and prescribe the one best way. Classical School seeks universal truth about management through specialization of work, unity of command, scalar chain of command and co-ordination of activities. Behavioral School emphasizes the ‘people factor’ and it does not view people as machines. These three major foretime schools of management have certain command feature. They just emphasize one aspect of management only, like Scientific management focus on work, Classical management focus on organization structure and Behavioral management focus on people. They believe that there is only one best way to manage a business and only one single factor drive the change. This emphasis tends to ignore the ‘environment factor’. These theories treat management as an internality rather than externality. According to their assumptions, environment seems to be a constant rather than a variable. We suggest that these foretime paradigms, in their time, have much more stable, predictable and parochial environment, therefore they do not see the problem of ignoring the ‘environment factors’. Nowaday environment, however, is no longer stable and predictable. The most recent school of management, System approach, implies that present day organization exist in highly dynamic and turbulent environment. Systems approach represents an organization as an Open System. They believe organization do not exit in isolation, on the contrary, organization exist within environment. We will detailedly discuss system approach and apply it for analysis of the environment in latter part of this article. Cause of Dynamic and Turbulent Nowadays, highly dynamic and turbulent environment was caused by such as globalization and appearance of internet. According to the Boston Consulting Group (Clarke Clegg, 2000) the following are the key â€Å"drives of change†: Change in economic structure The basis of competition The changing shape of business organization â€Å"Globalization is often used to refer to economic globalization, that is, integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. †( Bhagwati Jagdish, 2004). This process is a combination of economic, technological, sociocultural and political forces referred to by Rowman Littlefield in their book â€Å"Globalization and Belonging: The Politics of Identity a Changing World. †(2004) Globalization brings change in economic structure Impact on business: Deregulation and opening up of national economies. For example, accession of China to WTO. Challenges: Complex, fast-changing and unfamiliar competitive environment Globalization also brings change in the basis of competition Impact on business: Emergency of capabilities-based competition. For example, value/supply chain management. Challenges: Managing the relationship with global customers, supplier, and workforces, etc. Globalization change the shape of business organization Impact on business: Growth in flexible working arrangements. Challenges: Leading an organization of quite different design Globalization bring a new manner of doing business, since globality offer much opportunity and competitive to our business environment. You can join economic and technological forces with anybody in anywhere. This gives us a continued growth impact, whilst an uncertain and competitive impact. Take my ompany as an example. I work for a fabric manufacture company, Calen, which is based in Hong Kong having mills in mainland China and ship our product, fabric, to Jordan and Cambodia to produce garment selling to USA. We not only compete with Hong Kong rival, but also Vietnam, Turkey and any knitting company in the world. We also have to manage the relationships with suppliers wh o come from India and Pakistan. Under this highly dynamic and turbulent environment, in order to sustain growth and remain competitive we need our managers or organization to be proactive and actively seek opportunity and avoid risk. Nature and Characteristics of Environment Some mangers of organizations try to manage their organization/environment relationship. However, â€Å"The major issue for management in this respect is whether or not the environment is an unmanageable phenomenon†¦.. because of the nature, complexity and uncertainty which exists out there it is impossible to comprehend the organization/environmental relationship. If it is impossible to understand it is impossible to manage. †(David Hawley, 2008). If we want to manage the environment it is worth to have a better understanding of the nature and characteristics of environment. There are many definitions of the organizational external environment, .. all factors, EXTERNAL to the organization, a change in which may produce a change in the state of the Organization. † (Ackoff Emery, 1972, Thompson, 1968) Or as Von Bertalanffy (1968) suggests when considering the organization/environmental relationship, it might be viewed as: .. a living organism (The Organization), which interacts with its environment. † These definitions show there is interaction between organization and environment. We cannot isolate organization from its environment. Emery Trist (1969) suggested that certain types of environment contain certain characteristics: Placid Random (static) Placid Clustered (static) Disturbed Reactive (dynamic) Turbulent (dynamic) Placid Random – low degree of movement (change) and little connectedness (linkage); impose least threat to the organization; simple decision making and problem solving techniques required. Placid Clustered – similar to placid random, but environmental factors comes in cluster, e. g. suppliers or distributors; more multi-lateral dealing required by the organization to cope with them all; cannot take the environment as a given. Disturbed Reactive – relationship much more comple; fate of organization inextricably linked with factors in the environment; more uncertainty in the organization environment relationship; requires a response from the organization. Turbulent – high degree and rate of change in environment may be beyond the organization’s capacity to predict, major changes which appear remote, but are significant. Some managers of organizations seek to plan their change strategy in the light of circumstances. According to the complexity and uncertainty of the environment, it is impossible to completely perceive every circumstance surrounding origination. Therefore there must be some circumstances remains unknown to managers. We here distinguish circumstances as ‘known’ and ‘unknown’, the unknown circumstances such as the First Order Environment and the known circumstances such as Second Order Environment. We are going to introduce First/Second Order Environment in the following. Organizations are affected by elements of the external business environment: First Order Environment Second Order Environment Social; Owners Political Employees Economic Competitiors Legal Banks Technical Customers Suppliers Other Stakeholders First order environment is the outer layer that widely dispersed and affects organizations indirectly. It is very hard to predict indirect impact of first order environment on organizations. These elements do not directly change day-to-day operations, but they will affect all organizations eventually. Second order environment is closer to the organization and includes sector that conduct day-to-day transactions with organization and directly influence. It is easy to predict direct impact of these elements on organizations. It is basic operations and performance. In the figure showed below, organizations exist within second order environment, whilst second order environment exist within first order environment. Fig 1. adapted from David Hawley, Napier University, Business and Management in Context, lec 2 p. 8 Analyze Environment Having a better understanding of the nature and characteristics of environment is not enough for managers to plan their change strategy.