BMA101 Management essay

This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

Management

Essay

Introduction

In business, the world is not only full of competitiveness, but also inclusive of changing which will bring challenges and risks, so it is necessary for managers to make correct decisions to make profit as great as possible. However, environment uncertainty is changing all the time and managers need to analyse everything before making a decision and always brings unexpected risks which are difficult to control. Environment uncertainty has significant impact on management and decision making. Duncan(1972) defined it as a lack of information and knowledge for decision making, while Jabnoun, Khalifah, and Yusuf (2003) claims that it is equal to uncertainty of environment?s changing. They classify environment uncertainty as four types: Macro-environmental uncertainty, which refers to the uncertainty in the organization?s general environment, including political, organizational, lawful, and economic conditions(Miller and Friesen 1984 , via Jabnoun, Khalifah, and Yusuf 2003), Competitive uncertainty, which refers to the ability of the companies? establishing the powers of competition in the industry in the future, the relative powers of their competitors, their future courses of action, and strategies, Market and demand uncertainty which refers to the uncertainty stems from lacking clarity in the dynamics of the market and how it affect the organization?s operating, and demand and supply conditions in the market , and Technology uncertainty which refers to the uncertainty

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This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

about the changes in the industry?s technological resources and abilities. It has the possibility to destroy an organization?s competitive basis (Anderson and Tushman 1990, via Jabnoun, Khalifah, and Yusuf 2003). In addition, Bhaumik(n.d) claims that risks can be divided into three types: People risk, System and technology risk and Process risk, and Process risk includes Model risk, Transaction risk and Operational control risk.

Someone may criticize that environment uncertainty and risks make it more difficult for managers to make correct decisions. However, they also bring some benefit which most people may neglect. For example, environment uncertainty can train leaders to expand their horizon, allocate their time and information correctly and make more correct decisions. Managers can judge which event is the most event to them. Moreover, risks can train managers to always keep calm, save the company and suppress bureaucracy. Dealing with them effectively and correctly will lead to success.

This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

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This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

Influence of environment uncertainty

Environment uncertainty can train the ?heart-only? leaders. ?heart-only? leaders refer to ?who have always relied on analytical tools to predict where markets and technologies are going.? (Cairo, Dotlich, & Rhinesmith 2010). However, no one can ensure that those analytical tools can get all the information which is quickly changed and always have an accurate result. As a result, these leaders have to analyse the situation for themselves. Environment uncertainty will make some managers lost in the fog. In October 2008, the current financial economic crisis started in the USA and later spread globally, hit Europe and Oceania badly. Actually, a little mistake in budgeting or planning will be easily overtaken by large amount of customer consumption. (Stella 2009 ). As a result, at the end of 2008, many managers in these companies immediately slow investment, fire employees at the ground level, cut unnecessary spending and so on in order to save these companies. Cairo, Dotlich and Rhinesmith (2010) also claims that it can engage them quick analysis of the situation and listen to other?s opinions, and that may broaden their horizon and make a more correct decision.

In addition, managers can distinguish which is the most important thing among all the events. Cairo, Dotlich and Rhinesmith (2010) definite them as ?short-term priorities? and ?long-term priorities?. That means some event which can make profit can be dealt with later and managers have to pay more attention to ?short-term priorities?. To have such ability, managers have to train themselves to get more information like global

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This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

events and financial events as much as possible. Then, they must know how to allocate their time and information on their hand. That may help managers know the business inside and out better. They will know what their business focus on and what is best for it. (Garner 2010)

Moreover, environment uncertainty changes the environment of business. Any company?s success depends on its ability to providing high quality products and services to consumers. ( Cairo, Dotlich and Rhinesmith 2010) Customers prefer the products in high quality and safety. In order make more profits, companies have to take customers? fancy to attract them. As a result, more high quality products will be filed. In addition, what customers like impact the business orientation of the company a lot, and Cairo, Dotlich and Rhinesmith (2010) claim that what customers like is always changing, companies have to be sensitive and creative to seek business opportunities. There is no doubt that it will have a benign competition among the companies and the products are also becoming reassuring.

Furthermore, environment uncertainty can engage managers to keep track of the environment changes in business. A small change in business may lead to a serious result through the Butterfly Effect. (Garner 2010) Managers have to focus on it and analyze the situation for a long time, thus, they can forecast the changes and have a plan in detail and a perfect coping strategy before the environment changing.

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This essay aims to discuss the influence of environment uncertainty and risks on business management by explaining them in some concrete examples.

Influence of risks

The changing of environment also brings risks, but if the risks can be faced correctly, it may develop the market management. Khan &Gowda(2014) states that ?seeking opportunities through the risk process can create competitive advantage, maximise value and provide innovative solutions.? A comprehensive risk management strategy is necessary for today?s market. Opportunity usually follows risks. Once managers are at risk, it may incite their ability of being calm in the hour of peril. There is no doubt that being successful requires seeking the opportunity and approaching to deal with it effectively.

Since bureaucracy still prevails in most company, risks may be a good way to suppress it. Bureaucracy refers to the system of official rules and ways of doing things that a government or an organization has, especially when these seem to be too complicated (Hornby 2005) Those who lead a company for a long time, is easy to become a bureaucrat. They seldom listen to other?s advice, insisting their opinion even it is wrong, and they only trust themselves. However, when facing the risks, these leaders may have a wrong decision which may only benefit themselves and that destroy the company. In order to avoid such situation, it is important to suppress the bureaucracy to create value rather than failure. (Khan &Gowda 2014)

There is no doubt that the managers? attitude is of serious concern. That may change the company?s responds to emerging market and macroeconomic uncertainty and

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