The need to monitor change - Business Environment

IBM’s experiences underline the need for business organisations to consider the environment in which they are operating and, wherever possible, to anticipate changes that can affect their position. Ideally, a firm’s management should regularly monitor the external context in order to identify the potential threats and opportunities it poses for the enterprise and should fashion its decisions accordingly.As the previous chapters have indicated, this context comprises not only those groups and individuals affected directly by the organisation’s primary operations, such as its customers, competitors and other stakeholders, but also the broader societal environment in which these operations take place. Undertaking some form of environmental analysis or scanning inevitably implies the need to commit human and financial resources, which some organisations may be unable or unwilling to contemplate, particularly when there turns in terms of opportunities gained or threats avoided are difficult to calculate.
While such a view might be understandable, especially among smaller organizations operating in markets which appear relatively stable, it maybe misguided for at least two basic reasons. First, the resource cost of such an analysis need not necessarily be prohibitive, since a considerable amount of relevant data and information is available within both the organisation and the public domain at little or no cost to the enterprise. Second, the price paid for not investing resources in even a rudimentary form of environmental scanning may prove substantial and can range from lost opportunities to the ultimate failure of the organisation or its demise as an independent enterprise.Problems of environmental complexity, uncertainty and the large number of external variables may prove a further disincentive to organisations seeking to monitor actual or potential changes in the business environment, and undoubtedly help to explain why many firms adopt either a ‘do nothing’ or a reactive approach. Alternatively, the existence of these problems may be used as a convenient excuse by managers, who for one reason or another prefer to focus their attention on the day-to-day operations of the enterprise and to treat environmental influences as either irrelevant or peripheral to the processes of production. While such a view may be sustainable in the short term, as a strategic approach it can prove highly risky, particularly if one’s competitors take a more enlightened stance. It also indicates a lack of appreciation of the extent to which the internal and external environments are interdependent and of the need for management to achieve a‘strategic fit’ between what the environment requires and the organisation can offer, as well as what the enterprise needs and the environment can provide.

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