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Organizations Operate with Very Short Horizons, Reacting to an Ever-Changing Environment Essay

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Updated: Jan 21st, 2020

Introduction

The recent global financial crisis fronted numerous challenges to various organizations. Consequently, lessons emerged on how organizations react to the ever-changing economic environment. Conventionally, it is assumed that renowned organizations are focused, futuristic, and always enact long-term approaches to critical issues they face.

However, it is realizable that most organizations react to issues instantaneously just as they surface. Numerous organizations have no long-term or visionary measures meant to curb emerging challenges. This is a considerable factor when scrutinized critically in the organizational context. This paper discusses how some managerial systems are myopic thus hardly operate with visionary thoughts. This considers whether their response to different situations is long-term or short-lived.

The paper also uses real world examples to support the claims made regarding the short-term approaches meant to handle ever-changing business environment (Pistor 2009, p. 333). Evidently, there is a considerable difference between current managers’ operations and what is expected of them. Managers are expected to have a well-considered and visionary thinking; however, this has not been the case.

Since there are macro-environmental forces that dictate decisions made in response to ever-changing business environment, it is important to discuss this claim in consideration to such issues. Various factors namely political, social, legal, technological, and fiscal/economical factors contributed significantly to the global financial crisis. Hence, considering this topic with regard to the mentioned factors will help in illuminating how managers have failed to think and act with long-term visions expected from them.

Political Factors

Various managers have demonstrated limited visionary thoughts on political issues. However, these issues possess significant impacts on economic realms. Additionally, they influence on the ever-changing business environment. Deciding rationally on political issues is a crucial provision in various contexts.

Management must consider political factors existing in the locality, region, or nation of operation in order to run a relevant, legal, futuristic, and meaningful business. Government policies and political forces tend to affect the nature and orientation of any business in the marketplace (Gimbert 2011, p. 40). In a long-term basis, managers must consider provisions, which government intends to offer to organizations and to what extent.

This is helpful in making long-term decisions. Considering such provisions will ensure that the concerned organization thrives within the market and the industry at large. Political factors can be a major barrier to the establishment, management, and operation of any new business venture. Various managers have not considered such factors.

A real world example occurs when an organization intends to expand its operations globally but fails to consider (prospectively) political provision in the targeted countries. Some organizations rush for globalized business opportunities minus considering the long-term political factors in such contexts.

Considering political stipulations of such provisions will ensure that the concerned organization understands its environment better hence can make critical business decisions with regard to business trends and political requirements. Evidently, this factor considers the extent of intervention allowed within the market by respective governments.

Some managers have failed to consider that political factors equally dictate commodities admitted within a given political territory. Visionary managers should know legalized businesses in other political territories. Contrastingly, some businesses have not considered these factors as expected. These issues will help managers in making critical business decisions before investing massively in another territory or political environments.

For example, political factors have thrived to provide managers with viable business frameworks. Political factors can affect numerous business provisions. This includes infrastructure, the nature of the workforce, education within the territory and other social factors that are necessary for organizational prosperity. Organizations require viable infrastructural provisions (is a key factor in any meaningful business). Additionally, some political decisions will eventually affect the wellbeing of any organization.

Economic Factors

Organizations require considerable economic aspects in their operations. Precisely, economic factor is a key issue required in establishing and operating businesses. Economic aspects affect organizations through various factors. Conversely, most managers have not considered long-term impacts of economic factors on the prosperity of their organizations.

For example, managers are required to consider both current and future interest rates chargeable by financial institutions. Such interest scale might influence the nature of businesses to be operated within a given environment. Additionally, it is crucial to consider how the government policies will influence the economic factors in the organizational realms.

It is the mandate of every business to observe the interest rates charged by the financial institutions. This might influence the aspects of borrowing capitals for running businesses. Higher interest rates might disfavour an organization hence will affect numerous operations.

Borrowing cash (as decided by concerned managers) from financial institutions is a decisive phenomenon, which helps companies and prominent businesses to expand considerably. Some managers have not considered such factors critically with a long-term vision as expected in the corporate management.

Another economic factor that ventures must consider during their set-up and operations incorporate the taxation fluctuations within territories. Businesses require fair taxation charges and managers should consider this factor critically. Fluctuation in the taxation trends might affect an organization significantly in the market. For example, managers with long-term visions usually consider how various governments charge taxes. However, this has not been the case as evident by the recent global financial crisis.

The rate at which taxes are charged in a given market is a critical requisite for thriving businesses. It indicates the need for government regulations in the realms of taxation. Enormous taxes affect organizations financially while considerable rates might help in the establishment and operation of ventures. Management must consider this factor with precision. Failure in this has led to the witnessed short organization visions.

Most managers only deal with the challenges at hand but hardly plan for future uncertainties. This supports the claim that the current management crews have short visions in their planning and do not consider some organizational factors carefully.

It is crucial to pay tax; nonetheless, the concerned authorities must set considerable rates that will encourage the emergence of numerous new businesses. Additionally, considering the taxation provision will help an organization (through its managers) to plan and venture lucratively.

Another factor through which managers in most organizations have not expressed their full visionary mandates incorporates the general economic trends of a country or concerned region. Economic crisis, if not properly managed, affect organizations devastatingly. Most managers have not been able to think critically, evaluate options, and establish new mechanisms to alleviate economic crisis (Mohamed 2011, p. 15).

Additionally, economic factors influence the business trends and the market nature. For example, the economy of the nation will obviously affect expenses, revenues, and other business provisions. From this argument organizations must consider the economic aspects of their respective countries of operations before set up and subsequent operations.

An important provision in this context relates to the aspects of economic growth and other viable opportunities in economic realms (Walker 2010, p. 12). Precisely, most managers have not shown remarkable thoughts in the mandates in order to curb the ever-changing environmental factors.

Another important economic consideration is the inflation rates of a country. Organizations require stable economic progresses with limited inflation cases. Higher inflation rates mean that employees of any organization will demand escalated wages and cost of operations will be higher.

Additionally, the demands of the organization’s products will diminish leading to massive losses to the business (Vasková & Vasková 2010, p. 108). Hence, this is a crucial consideration with respect to its applicability. Another factor worth consideration is the exchange rates of a given currency when compared to the rest.

Managers are expected to consider that fluctuating currency values might affect the business tremendously especially when it operates internationally. During the economic crisis, foreign rates might reduce the net income of the business. These are long-term considerations, which have been neglected some managers

Social Factors

Organizations (through its visionary managers) should consider the social aspects of any given market before establishing and operating its businesses in such territories. Evidently, the social trends of a given country might affect her economic trends, business orientation, workforce composition, and the nature of pays.

Organizations require viable social factors to favour their managerial aspects (Jeffs 2008, p. 28). The management is required to study and understand the social aspects of a given locality. This is helpful in making critical decisions on how to establish and operate businesses into the future.

Long-term managerial success depends on numerous factors. Before the start up of any business, the owners must consider numerous factors with regard to social provisions. Social aspects have contributed to the ever-changing environmental factors. Consequently, the concerned managers must embrace long-term thoughts on how to deal with adverse social factors.

Additionally, the living trends in a given country or locality can also affect these factors with regard to operations and business venture. Evidently, the living trends will obvious affect the spending provisions of each particular family. Most managers have not considered long-term provisions of these factors.

However, they wait for emerging issues (ever-changing environmental issues) to solve. This shows how most management systems are less visionary. It is a requirement of any business to identify and conquer its market segment with relevant products that will consider the demanded managerial and social aspects.

Additionally, social factors have equally influenced managers’ visionary decisions to use the workforce. Labour provision is a critical component in the business; nonetheless, it hardly helps if it is affected by the social factors. Most organizations have only been dealing with emerging challenges.

Planning for the future in terms of social challenges has not been practiced fully. This indicates why management has lacked visionary thinking and critical consideration on their endeavours. Most managers only deal with instantaneous issues rather those setting measures that would prevent future occurrences.

For example, consumers’ attitude towards a given commodity is a subject of social factors. This might affect the sales of a given product and subsequent decisions of managers. Management should decide on which products to sell, where, and when. Determining the nature of business will also dictate the social provisions necessary for the establishment and operation of a new venture.

As a macro environmental factor, social provisions are important in any business following their vitality, applicability, and relevancy in various businesses and territories. Hence, prospective and visionary managers must consider such factors critically based on long-term provisions.

Additionally, managers should consider future demographic variability rather than dealing with the current variables as witnessed with most managers. Demographic factors affect the buying trends, nature of goods to avail in the market, viable management practices (to suit existing employees).

This signifies the need to consider the social factors of a given environments. Another considerable social aspect is the income distribution (currently and in future) of the prospected market segments. Income criteria determine the spending aspects hence can either promote or deter organizational growth.

Technological Factors

The emergence and ratification of technology has helped numerous businesses to explore varying markets globally. Managers require viable technological provisions to help in operations and production of commodities. Changes in technological issues require managers to think critically and adjust to the ever-changing environmental provisions.

However, current management systems have not focused massively on how to handle future technological concerns as expected. Technology is critical since it dictates the nature and trend of any business. It is the mandate of various businesses to consider the aspects of technology due to its applicability in the current competitive markets. Introduction of novel commodities into the market signifies the nature and significance of technology (Ahmed 2010, p. 3007).

Additionally, the world’s market has become quite competitive. Thus, conventional products and managerial skills will hardly survive in the future. Considerably, numerous businesses have managed to make critical decisions on matters that concern technology. This occurs with regard to the market demands and the new business trends.

Technological approaches in the business realms have simplified the business aspects in varied contexts. The mode of transaction, production, and communication among the business stakeholders has improved considerably due to the emergence and embracement of technology.

Hence, managers should embrace technology as a macro environmental factor in the corporate realms. Recognition and ratification of technology contribute to the competitive advantages that businesses require both currently and in future. The need to have lucrative managerial plans that ratify the aspects of technology is crucial in various organizations. This shows how most management systems are less visionary.

Precisely, technology is required in order to create novel commodities and emerge with fresh business and managerial processes. Similarly, this indicates why managers require future plans for the ratification of technology in order to remain relevant and competitive in the market as indicated before.

Evidently, for an organization to prosper, it must outdo other industry players by being proactive, prospective, innovative, and deal in products that are technologically advanced. It is crucial to determine such factors prior to rendering the entire processes futile (Wiegel 2011, p. 78).

Current businesses require novel and managerial trends as indicated earlier. This necessitates the establishment and ratification of technology among the mentioned businesses. Conclusively, new technological prologues and visionary managerial trends will benefit the business and its customers with profitability and satisfaction respectively.

Environmental Factors

Environmental factors similarly influence businesses. They form a critical macro environmental consideration with regard to business orientations and operations. Precisely, the current managerial trends have not considered future environmental issues. Organizations must observe the environmental trends that affect businesses depending on the locality and season.

Weather/climate can massively affect a business set up and operation. Hence, they require prospective managerial options. For example, there are businesses, which can only perform under a given weather. This means that the buying trends and market opportunities might be affected by the environmental factors. If climate disfavour the production and sale of a given product, the concerned business might make losses hence necessitating viable and critical business decisions within the organization.

This shows how most management systems need to be more futuristic. Organizations must consider whether its prospective business is a subject of weather and climate disparities or not. The changes that occur within the environment might influence the volume of sales as indicated before.

For example, refreshments and cold drinks might not do well during winters or cold weathers. This necessitates managers to reconsider their operational trends and business ventures to curb future challenges. Precisely, new businesses require substantial management and environmental factors.

Additionally, there are other environmental factors which require managers to adopt critical and long-term thinking capabilities. Dealing with instantaneous issues can be disastrous minus future considerations. This fact demands managers to be proactive and futuristic in their decisions.

For example, factors like global warming might dictate the nature of businesses assumed by a corporation. For example, if an organization indulges in businesses that emit hazardous gases to the atmosphere, the business might meet stringent regulations from most governments, organizations, and environmental activists (Popa 2011, p. 60).

It is crucial to consider such factors besides the ability and will to protect the environment. This factor relates to the stipulations demanded by numerous organization meant to protect the environment. Managers considering such revolutionary factors are futuristic. Businesses must endeavour to conform to the environmental demands in order to realize any vitality and legality.

Considerably, environmental factors might influence the trends of production and business operations (currently and in future) as indicated earlier. This is a critical provision with regard to business trends. It is recognizable that critical decisions in the business need to consider environmental issues (Faarup 2008, p. 89). This is crucial in diverse perspectives. Failure to adopt these stipulations by the current managers has shown how most management systems are less visionary.

Organizations require supportive legal provisions that govern the targeted industry and the business environment at large. Managers must consider these factors prospectively. Additionally, some laws enacted within a country might affect the operational endeavours of a particular business (Park 2009, p. 123).

It is vital to scrutinize the legal issues that operate within a given business territory as indicated before. For example, organizations have the mandates to identify, scrutinize, and consider whether the stipulated territorial regulation will favour the prospected business or not.

Concurrently, there are legal matters that do not favour exportation, importation, and local production of some commodities. A business can be affected massively by the mentioned trends. This is s crucial phenomenon in various aspects and managers should consider it with futuristic concerns.

Conclusion

It is conventionally regarded that management systems should embrace the aspects of long-term thinking, futuristic obligations, and critical considerations on contentious issues. Nonetheless, it is evident from the past instances (like the recent global financial crisis) that most management provisions are less visionary and only react instantaneously to an ever-changing business environment.

Reference List

Ahmed, A 2010, ‘Global financial crisis: An Islamic finance perspective.’ International Journal of Islamic and Middle Eastern Finance and Management, vol. 3 no. 4, pp. 306-320.

Faarup, P 2008, The Marketing Framework, Academica, London, UK..

Gimbert, X 2011, Think Strategically, Palgrave Macmillan, Hampshire, UK.

Jeffs, C 2008, Strategy, SAGE, London, UK.

Mohamed, A 2011, ‘The impact of the financial crisis on the global economy: Can the Islamic financial system help?’ The Journal of Risk Finance, vol. 12 no. 1, pp. 15-25.

Park, Y 2009, ‘The role of financial innovations in the current global financial crisis. Seoul Journal of Economics, vol 22 no. 2, pp. 123-144.

Pistor, K 2009, ‘Sovereign wealth funds, banks and governments in the global crisis: Towards a new governance of global finance?’ European Business Organization Law Review, vol. 10 no. 3, pp. 333-352

Popa, D 2011, ‘Economic and social dimensions of the global crisis: Implications on international trade.’ Studia Universitatis Babes-Bolyai, vol. 56 no. 3, pp. 58-73.

Vasková, N & Vasková, V 2010, ‘Breakdown of trust in financial institutions in light of the global financial crisis.’ Journal of Advanced Studies in Finance, vol. 1 no. 1, pp. 108-114.

Walker, M 2010, ‘Will recent bad policy reverse the global advances in economic freedom? Fraser Forum, vol. 1 no 21, pp. 12-14.

Wiegel, W 2011, Survival Factors of Newly Founded Firms: Theoretical Frameworks and Empirical Evidence, GRIN Verlag GmbH, München, German.

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