Dealing with Environmental Changes
An organization may use several techniques to cope with its environment.
- Buffering : Buffering techniques are used to soften the impact of environment on the organization. Stocking materials, preventive maintenance, employee training, building inventory are examples of buffering. These precautionary measures enable the organization to avoid damage due to changes in environment. For example, by maintaining a supply of raw materials, the company can operate at full capacity even if there are problems in obtaining fresh supply for a specified period.
- Leveling : Whereas buffering absorbs environmental fluctuations, leveling or smoothing attempts to reduce fluctuations in environment. For example, retail firms faced with seasonal fluctuations offer price cuts in order to spread sales more evenly throughout the year. Special air fares for night flights is another example of leveling.
- Anticipation : It means acquiring information about probable changes in the environment. For example, a manufacturing firm tries to anticipate demand for its product before deciding production schedules and related matters. Other areas in which organizations frequently anticipate changes are customer needs, competition, technology and availability of human resources.
- Rationing : It involves allocating organizational resources according to a system of priorities. Rationing is resorted to when an organization is unable to meet all the demand. For example, when the demand exceeds supply manufacturer may ration supplies to dealers.
- Dominating : The organization attempts to control events in the environment and reduce its dependence on them. By developing several suppliers, a firm can reduce dependence on one or two suppliers. An enterprise may collaborate with others and may enter into contracts. Advertising, public relations and lobbying are also examples of domination.
- Changing : An organization may change itself, its operations and output. For example, it may change its product line to meet changes in customers’ preferences. Changing is a more difficult coping strategy, while taking action in response to changes in environment interrelationships between various elements of environment and their likely impact should be understood.
