The Problem of Environmental Uncertainty and Adaptation

Environment is made up of all elements which exist outside of the organization boundary and have potential to influence and effect the part or whole organization. Sectors are part of the environment and consist of several elements which may have direct impact on the organization or have indirect influence. Environment uncertainty impacts organization most from those sectors where it deals on regular basis. For example, Technology sector of an organization may face competition on techniques on production, scientific theory, information technology, and e-commerce. Most cases, decision makers do not have enough information what could be happen in future from those sectors. Managers need to stay alerts and should always looking at competitors, broad industry trends, socio- economic development, government policy changes, technology advancement, market change. Organization should balance the internal structure aligned with the external environment. Traditionally this has been done through boundary-spanning roles, responsible to bring information into organization from those external environments and send favorable organization information to external environments. To minimize the dependency on the external resources for controlling over the environmental changes, Organization can adopt these two strategies - a) establish favorable relationships with the key elements in the environment and b) shape the environmental domain by influencing key sectors.

Organizations develop new things during its entrepreneurial stage of life cycle. If any of new things succeed and generate revenue to the organization, they try to learn that what they have done breeds success. So they persist, becoming ever more focused in what they do, and ever more specialized in the skills they acquire. Competency can increase exploitation and reduce exploration, which may cause future difficulties if the environment changes and organization failed to make boundary-relations with environment sectors....