As environmental uncertainty increases, managers must develop techniques and methods for collecting, sorting through, and interpreting information about the environment. Discuss four of these methods, explaining when and why each would be used.

Question

What will be an ideal response?

Answer 1

The first step in coping with uncertainty in the environment is to pin down what might be important. Environmental scanning includes searching for information that is unavailable to most people and sorting through that information to interpret what is important. Competitive intelligence includes the information necessary to decide how best to manage in the competitive environment they have identified. As managers try to determine the effect of environmental forces on their organizations, they often develop different outcomes that are uncertain in the future-alternative combinations of different factors that form a total picture of the environment and the firm. Frequently, organizations develop a best-case scenario (the occurrence of events that are favorable to the firm), a worst-case scenario (the occurrence of unfavorable events), and some middle-ground alternatives. The value of scenarios is that they help managers develop contingency plans for what they might do given different outcomes. Whereas environmental scanning identifies important factors and scenario development develops alternative pictures of the future, forecasting predicts exactly how some variable or variables will change in the future. Benchmarking means identifying the best-in-class performance by a company in a given area-say, product development or customer service-and then comparing your processes with theirs.