Abstract
Business environment keep on changing with time. Many changes have been witnessed forcing other businesses to close even as others to thrive. This difference therefore is squarely credited to the management for failing to timely accept the changes within the organization or its environment.
Whenever a change or a crisis occurs, the management team is mandated with the task of acting decisively by either giving directives on how best the organization can effectively adapt to the changes without jeopardizing its noble future and its relation with their customers. A business success relies on how fast a company can comply positively with the ever changing environment.
Introduction
Threat Rigidity Effects in Organization are the reactions of the organization after an unusual trend in the business operating environment. These changes can be either in terms of technology, employment requirement, government policies, or market chances such as price or cost of production.
On the other hand, organizational behavior is the expected reaction from an organization after a certain change in the line of business. Some management team in certain organizations tend to not to react swiftly towards the changing business environment because their decision making process is either slow or insensitive (Hamblin 323). Most organizations take long to act, hence subjecting their organization to hostile operating conditions.
Technology and other changes that affect businesses directly have increase crisis in corporate business management because not all the changes they pose to the organization calls for or need quick action to be taken (Hamblin 324). This is because some of the changes need to be re-examined and scrutinized carefully.
At the same time however, corporate bodies should always act on time to avoid unnecessary avoidable losses that might be brought forth by slow decision taking. For prudent management, corporate institutions should put in place good plans for the coming challenges for effective future management.
Method
By observing how two big companies namely: The Penn Central Railroad and Evening Post failed in their mission in business environment. The reasons why and how these two companies should have managed the crisis that eventually pushed them out of business is considered. Also addressed is the prevailing condition at the time and the impact this had on the business.
Results
The Penn Central Railroad collapsed because they continued with their normal operations schedules without factoring in the oil crises that had a major impact on the company’s line of operation. They failed to meet their operational costs while in operation hence leading to a closure of their company.
On the other hand, Evening Post considered transferring the high cost of production they met during production to their customers (Staw Sanderlands and Dutton 503).
The price of their end product became more expensive and as a result, their customers could not afford it. Sales dropped significantly hence a major negative profit drop was experienced. They were no longer able to meet their daily operational costs and these resulted to the closure of their company.
Discussion
Although failure is part of life, in business failure is one factor that is not given a chance at all costs. Managers are employed by companies to steer the company towards the path of success. The prime reason of a company to engage itself in any form of business is to make profit and a steady continuation of its operations.
Any possible threat to the core interest of any corporate body should be dealt with on time and effectively. Despite this noble knowledge that is expected to be owned by those who are at management level, assumptions and lack of proper and timely information regarding this guide tends to be misleading.
The Penn Central Railroad is a living example of threat rigidity effects in an organization that brought it down. The Penn Central Railroad, a transport company, was hard hit by the oil crises. The company’s decision makers believed that the harsh and unbearable cost of giving their services would soon come down.
Instead of this transport company transferring the cost of service delivery to the customer or cutting down their operations, they were rigid and not willing to change positively to counter the threat that was haunting them. The cost of production went high to unexpected limits. Profits shrunk and the company could no longer operate within its means (Straw et al 511).
During this challenging economic time, Railroad management board continued to pay dividend to their shareholders and heavy salaries to their workers. The continuity spirit was not considered in any way. The threats posed by the oil prices did not make them divert or changed the company strategies in stead they pushed on to their goals blindly.
Railroad could have reduced their operation costs to avoid heavy losses or transferred the costs to the consumers of their services. Also, the number of employees could have been reduced, not to mention that the management could have avoided paying dividends to the shareholders because dividends can only be paid if a company had or is making profits in a certain stipulated financial period.
After realizing their situation albeit late, they abruptly decided to merge with other like- minded companies. This reasoning was not perfect because on their side they were not stable from within. They failed miserably in that mission and they could not be able to continue with their operations.
In the other case of Evening Post News paper Company, the management was rigid to their objectives of increasing the prices of their products in the market without putting into consideration the quality which remained constant irrespective of the price change. The consumer’s ability to continue enjoying their services was not put into consideration.
For this newspaper company to continue making profit, readers must be willing and able to consume their services. In their case, the ability of the reader to buy their newspaper was compromised; hence no massive sales were made. Consumers are motivated by attaining the value of their money in whichever product they consume in the market.
The Evening Post Company could have put more consideration on the quality of their paper first before increasing the value of their product to the customers. Customer retaining skills were not promptly used to cover the ensuing losses owing to a loss of customers’ loyalty (Hall 186).
The company could have concentrated on producing more quality paper that could be easy to move in the market rather than producing less and of substandard quality paper.
Their profits could have only been maximized by selling more affordable papers other than producing more expensive paper that were not selling as fast. They failed to understand the changing competitive environment from the other market players but instead stack to their prices and quality to maintain their customers (Hall 187).
The organizational behavior by multilevel analysis shows that for a company to successfully achieve its goals and objectives through friendly and unfriendly environment, it must be willing to be flexible. Although all companies are guided by well stipulated rules and regulations, they must be willing to change with the environment (Hall 187).
Failure to change with time, these companies should expect either to be edged out in business by their competitors or collapse due to their inability to cope with the new business environment. For example, if the above mention company were flexible and not rigid to their old principles in their line of production, could have managed to survive the threats that they were facing.
The decision making process should also be harmonized to favor the management when a threat is noted. The decision making process take long to arrive to the most favorable decision hence an able to shield the company from potential risks. Divisional managers should be liable of their area of operation. This will therefore ease the decision making process that might take long consulting to the seniors or even shareholders.
Slow decision making have resulted in the collapse of many companies and there is the need to reverse this trend. At the same time, right and timely information is paramount in any business. Strategists should help the company to oversee the future by providing the right information to the management and planners in the organization.
This factor therefore will help managers and planers put in place the right measure to counter the foreseeable risks. In case of an unavoidable risk, proper risk control measures should be implemented to shield the company from massive destruction of its programs. All possible counter measures should be put on board for the sake of company continuity and prosperity.
The decision on whether to cut down there production or to re-brand their products can be decided only to survive a harsh business environment. By so doing, corporate should first consider the flow of the same or more quality service they offer to the customers. (Bourgeois, McAllister and Mitchell 509). There should be no halts of the follow of the products or service to their loyal customer while implementing changes.
Feedback is another important source of reliable information for an operating company. This program shows the customers’ reactions in comparison with the company performance. Improvements should be made as first as possible when alarms are raised by customers.
While the company is growing, feedback is important because one can easily note the unsatisfied and dissatisfied customers and therefore improve on that effect. The customer’s wish is paramount and should always be put in to force while making any decision.
The image of the company is equally portrayed by its workers. If a company fails to change or improve on the relationship between the workers, managers and the share holders among others, that company will repute badly to them and no one will be will be willing to relate with it (Hannan and Freeman 130).
Workers may fail to keep and maintain the standards of the company if the company itself fails to motivate them equally with the contribution they offer to the company. Some managers tend to remain on the old fashioned motivational processes without considering the changes in business environment among other related areas that the workers are involved in.
Companies should considers their employees fairly and enhance good communication as per the changes in economic situations for them to maintain a good working force in their company. Also, the employees’ pay should be relevant to the profits made by the company (Hamblin 326). This will help attain good labor force as well as retaining the best workers for a company prominent future.
Conclusion
The most prudent management should act as a phase of change while managing a cooperate body. Flexibility and timely decisions should always be put in place always when the need arise. Change is inevitable and as such, this concept should be kept, practiced and always guided towards ensuring that the organization changes with the prevailing changes in their respective business environment.
Positive growth will only be achieved when and only if the decision makers allow changes to take its course. All threats that stand to change the company course should be allowed to take place but within the companies goals, objectives and vision.
Work Cited
Bourgeois, John, McAllister, Daniel and Mitchell, Terence. The Effects of Different Organizational Environments upon Decisions about Organizational Structure. The Academy of Management Journal, 21.3(1978): 508-514.
Hall, Roger. A System Pathology of an Organization: The Rise and Fall of the Old Saturday Evening Post. Administrative Science Quarterly, 21. 2(1976): 185-211.
Hamblin, Robert. Leadership and Crises. Sociometry, 21.4(1958): 322-335.
Hannan, Michael and Freeman, John. The Population Ecology of Organizations. The American Journal of Sociology, 82. 5(1977): 929-964.
Staw, Barry, Sanderlands, Lance and Dutton, Jane. Threat Rigidity Effects in Organizational Behavior: A Multilevel Analysis. Administrative Science Quarterly, 26. 4(1981): 501-524.