MBA

1. Sources of uncertainty in the
organizational environment…
By,
Prayag C

2. Organizational Uncertainty
 The ever-changing environment of an organization
creates uncertainty
 Uncertainty can pose either opportunities or challenges
that an organization must deal with in order to succeed

3. Sources of Environmental Uncertainty
Dynamism
Richness
Complexity

4. Complexity
 Environmental complexity is a function of strength, number, and
interconnectedness of the specific and general forces that an
organization has to manage
 It is the degree to which an organization is related to the various
environmental forces that an organization deals with, such as
suppliers, technology, and customers
 The effect of multiple environmental forces acting simultaneously
creates uncertainty on the organization

5.  Complexity can increase greatly when specific &
general forces in the environment become
interconnected
 The more complex an organization’s
environment, the greater the uncertainty about that
environment

6. Richness
 Environmental richness is a function of the amount of
resources available to support an organization’s domain
 Richness is the abundance of resources with an
organization’s environment, such as the availability of skilled
workers
 Poor environments increase uncertainty due to multiple
organizations seeking to gain control over limited resources

7.  In Rich environments, uncertainty is low because
resources are plentiful – org need not compete for
them
 Environments may be poor for two reasons
1) An org is located in a poor region of a country
2) There is a high level of competition and orgs are fighting
over available resources
 These battles result in uncertainty for an org

8. Dynamism
 Environmental dynamism is a function of how much and how
quickly forces in the specific and general environments
change over time and thus increases the uncertainty an org
faces
 Dynamism is the degree of change of the various
environmental factors that affect an organization, such as the
availability of raw materials from suppliers
 Organizations operating globally have a greater degree of
dynamism to deal with, creating more uncertainty