Sources of uncertainty in the organizational environment

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Sources of uncertainty in the organizational environment

  1. 1. Sources of uncertainty in the organizational environment… By, Prayag C
  2. 2. Organizational Uncertainty  The ever-changing environment of an organization creates uncertainty  Uncertainty can pose either opportunities or challenges that an organization must deal with in order to succeed
  3. 3. Sources of Environmental Uncertainty Dynamism Richness Complexity
  4. 4. Complexity  Environmental complexity is a function of strength, number, and interconnectedness of the specific and general forces that an organization has to manage  It is the degree to which an organization is related to the various environmental forces that an organization deals with, such as suppliers, technology, and customers  The effect of multiple environmental forces acting simultaneously creates uncertainty on the organization
  5. 5.  Complexity can increase greatly when specific & general forces in the environment become interconnected  The more complex an organization’s environment, the greater the uncertainty about that environment
  6. 6. Richness  Environmental richness is a function of the amount of resources available to support an organization’s domain  Richness is the abundance of resources with an organization’s environment, such as the availability of skilled workers  Poor environments increase uncertainty due to multiple organizations seeking to gain control over limited resources
  7. 7.  In Rich environments, uncertainty is low because resources are plentiful – org need not compete for them  Environments may be poor for two reasons 1) An org is located in a poor region of a country 2) There is a high level of competition and orgs are fighting over available resources  These battles result in uncertainty for an org
  8. 8. Dynamism  Environmental dynamism is a function of how much and how quickly forces in the specific and general environments change over time and thus increases the uncertainty an org faces  Dynamism is the degree of change of the various environmental factors that affect an organization, such as the availability of raw materials from suppliers  Organizations operating globally have a greater degree of dynamism to deal with, creating more uncertainty

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