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1. FACULTY OF SOCIAL SCIENCES
DEPARTMENT OF POLITICAL AND ADMINISTRATIVE STUDIES
MPA – 611
DEVELOPMENT MANAGEMENT & POVERTY ALLEVIATION
STUDENT NAME: SOLOMON SAMUEL ADETOKUNBO
STUDENT NUMBER: 201502535
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2. LECTURE: PROFESSOR LEKORWE M.
MID-TERM PAPER
TITLE:
THE UNCERTAINTY OF ORGANIZATIONAL ENVIRONMENT IN
DEVELOPING COUNTRIES
1.0 INTRODUCTION
Organization in general terms can be explained as a social entity with the sole purpose of
achieving set goals and objectives. They are mostly characterized by planned structures
and well managed activities. Corroborating this with Armstrong (2009, p 237), he defined
an organizational behavior as how people perform set of prescribed roles within complex
systems. The complex system Armstrong discussed are active elements that have the
potentials to influence the outcome of an organization, they include competitors,
customers, socio-cultural factors, legal framework etc.
Organizations across the globe are open system and do not work in isolation.
Organization structures operate a two-way traffic system that affects and is also affected
by their environment in manners beyond their control.
Owing to the fact that globalization is gradually taking over the world and leaving it
border-less, this makes the environment within which managers and public administrators
now work more prone to uncertainty, affecting their activities and scope of operations.
The contingency theory in strategic management states that environmental elements have
great impact on virtually every aspect of management which includes process, strategy
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3. and outcomes of the organization (Bourgeois, 1980, p.28). This makes the organization
environment a key source of uncertainty faced by public administrators and managers.
The state of uncertainty in the organization environment has posed a considerable
challenge to many organizations in this 21st
century, especially those in the developing
nations, thus affecting their growth and operations. An organizational model applicable in
Nigeria might fail to work in Botswana, likewise what is applicable in Cuba might not
meet the needs and expectation of organizations in Turkey as a result of the divergent and
disparate environmental conditions which exist in the respective developing countries.
When the epidemic of the deadly Ebola virus hit West Africa, Nigeria was able to
obliterate the virus in three months whereas it took Liberia nineteen months to fight the
virus despite adopting the same technology and quarantine measures used in Nigeria.
This paper posits that the organization environment in developing countries is to a great
extent prone to uncertainty. The paper discusses and outlines the elements that make up
the organization environment and point out the major factor that propagate uncertainty
within the organizational environment in developing countries.
2.0 CONCEPT OF ORGANIZATION ENVIRONMENT
Organization environment in general terms refers to the conditions, circumstances and
influencing factors that affect the ability of the organization to meet its objectives
(Ngirwa, 2006). In essence the organization environment are set of pressure and forces
surrounding an organization; these forces have the potential to affect the way it operates
and its ability to acquire scarce resources.
In developing countries, the organization environment is to a large extent uncertain and
unstable due to managers, public administrators and policy makers lack of access to
relevant information, neither are they able to accurately provide and anticipate all the
consequences, as a result this leads to uncertainty in the organization environment
resulting to internal and external shock (Turner & Hulme 1997, p 40)
Rice (1963), expounded further on the issue of uncertainty in the organizational
environment and classified the uncertainty around two forces, internal forces and external
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4. forces. Rio further identified the internal forces to include the suppliers,
union/association, organizational culture, customers, office politics etc. The
demographics, legal, political, economic, global amongst others make up the external
forces.
There are several factors that can upset the organization operation and create uncertainty
in the organization environment, for the purpose of these paper, the economic / global
factors, demographic factors, political factors and socio-cultural factors will be discussed.
2.1 ECONOMIC / GLOBAL UNCERTAINTY:
The economic environment affects the ability of managers and public administrator’s in
developing country’s to function optimally and influence their strategic choices to a large
extent. The adverse effect inflation and interest rates have on organizations gives room
for uncertainty within the organizational environment.
Using Venezuela as a case study, the current rate of inflation in the country stands at
57.30%. Between 1973 and 2015, inflation was as high as 115.18 (Forbes, 2014).
The economic instability troubling Venezuela is as a result of continued slowdown of
global demand and fluctuation in oil prices which has collapsed from $105 down to
below $40 in a little bit over a year, thus leading to a negative impact on the country’s
domestic economy since it represents over 96% of the country’s exports and generates
nearly half of fiscal income (World Bank, 2014).
Inflation in the country has led to food crisis in the country, there are food shortages at
grocery stores across the country because the government can't pay to import food
(Sugar, flour, wheat etc.) and other basic imports that account for 70% of Venezuela's
consumer goods. (CNN 2015). The recession has also led to the lay off of thousands of
workers in various organization has it has been reported by various news media in the
country recently.
2.2 DEMOGRAPHICS UNCERTAINTY
Changes in the physical characteristics of the population such as gender, age, level of
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5. income, geographical location etc. if not properly manage can have an adverse effect on a
country which will lead to a state of uncertainty in its organizational environment.
Turner & Hulme (1997, p 39) noted that the population is very crucial, particularly to
public policy makers because it allows them to make provision for services that will be
needed and plan for future expectations.
According to the Nigerian National Bureau of Statistics (2009, p.48), the population of
the country was recorded to be 180 million in 2014, with more concentration of people in
Lagos, Kano, Ibadan, Abuja as a result of rural-urban migration etc. This has led to a
state of imbalance between the ratio of population and the limited infrastructure
available.
According to the World Bank (2013), 42% of the growing urban population in South
Africa are youth. Often times most youth have special preference and taste totally
different from the adults as a result, the preference and consumer taste changes which
ultimately affects the type of products that will be manufactured by the various industries
even as the youth population continues to increase.
2.3 POLITICAL UNCERTAINTY
Among external environmental factors that can affect an organization is the political
factor. The political factors affecting organizations should be given a lot of importance
because they affect organizations by adding a risk factor and leading to major loss for the
organization.
Political decisions made by the government in a country affects the economic
environment. The structural adjustment programme (SAP) which shoved privatization
and other deregulation policies on developing countries, especially those in Africa
brought about uncertainty and serious problems on how to administer them.
Looking at the case of Ghana, the current economic and social issue currently facing the
country can be traced back to the former President, Jerry Rawlings administration in
1983, after being advised by the World Bank to deregulate the financial and investment
institutions (Modern Ghana, 2013). After Rawlings came President Kuffour. By the end
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6. of President Kuffor’s term, the loss of manufacturing jobs have caused recession which
the country suffers till date.
Lack of political stability in a country affects organizational operations, this true as
witnessed in countries like Sudan, Congo, Syria, Somalia, Libya etc. where organizations
had to close-down or relocate to neighboring countries. The stability of a political system
ultimately affects the appeal of a particular local market.
2.4 SOCIOCULTURAL UNCERTAINTY
According to (Turner, et al, 1997 and Rainey, 2009) attitude, gender, predominant values,
social customs, ethnicity and religion are elements that make up the cultural organization
environment. The socio-cultural environment basically reflects the morals, customs,
values, and demographic nature of the setting in which the organization functions.
Ethnicity differences weaken and upset the progress of development in an organization.
This has been responsible for most of the civil wars in developing countries. The Chadian
civil war between 2005-2010 was as a result of religious differences. In January 2016, a
ban was placed on the hijab for all lawyers, prosecutors and other professionals working
in the country's judicial institution. This has sparked protest in the country and led to
many Muslims in the judiciary boycotting work (BBC 2016)
It is important for administrators and managers to take into consideration the predominant
norms and customs when formulating policies so as to avert the challenge of ethnicity
altercation or religious upheaval in the society.
3.0 CONCLUSION
The environment of organizations plays an imperative role due to its influence on the
decision making process in an Organization. Uncertainty is a permanent feature of the
organization environment due to its dynamic nature in the society. The only way
managers, public administrators and policy makers can mitigate this is by frequently
conducting an environmental analysis on the extrinsic and intrinsic elements around the
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7. environment so as to help identify potential opportunities or threats that exist and
determine the best course of action to follow.
Uncertainty of the organization environment in developing countries can be desirable or
undesirable depending on how well managers and policy makers are readily prepared for
it; a situation of resource scarcity may be unfavorable while a geometrically progressive
population growth leading to excess labour can be exploited for generating increased
efficiency in different organizations and sectors available in the country.
Organization environment can be likened to a football pitch, for the organization to
succeed, it must master the field theatrics and study every stakeholder involved.
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CNN (2015) “Five reasons why Venezuela may be the world's worst economy”
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Forbes (2014) “The three countries with the highest inflation”
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policies-in-ghana.html retrieved on the 13th February 2016.
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