Merits of Environmental Uncertainty

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The Merits of Environmental Uncertainty
People are creatures of habit and have a need to know what the world has in store for us. We plan every aspect of our lives from what we will eat later in the day to what we will be doing 40 years from now when we retire. The business community is no different and seeks to plan and predict what the future will hold in terms of their success. We are at a point in time in which there is a great amount of uncertainty in the business community. Investors see politicians in Washington who are hostile to business, inevitable tax increases on the horizon, and growing skepticism and distrust of business from the American public. These factors, among others are responsible for creating a great amount of environmental uncertainty. In the past we have looked at uncertainty as a weakness but I contend that this environmental uncertainty can be positive if appropriate action is taken by management at any given organization.

Environmental uncertainty consists of two different facets. One is the degree of change within the business environment which is referred to as dynamics. In a dynamic business environment, managers typically try to keep the organization stable and try not to make any waves. Instead, they should use the dynamic environment to their advantage and exploit the chance to separate themselves from their competitors. For example, during economic downturns, advertisers usually slash advertising budgets (von Oetiger, 2004). However, according to Stanley, during an economic downturn, a strong advertising/marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery (Stanley, 1980). This makes sense because a company will stand apart from its competitors when there isn't such a barrage of information coming their way and helps their customers see them as a solid, stable organization. One way to use...
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