Some firms have been forced out of business with the earthquake Essay

Some firms have been forced out of business with the earthquake. Although, this was an extreme event, it raises a very important - Essay Example Now the question arises is it possible to do long term business planning? Or are we victims of the external environment? This paper aims at analyzing the extent of the ability of the organizations to plan for the future by taking into account all the external factors? Is it possible to predict all external factors affecting the business in the long term and plan accordingly? Can we predict natural calamities such as earthquakes and plan accordingly? Discussion Uncertainties in the environment are unavoidable. Dealing with these uncertainties in the environment requires inclusion of scenario planning in the strategy formulation. The traditional ways of strategy formulation can further be strengthened by inculcating scenario planning in the process by assessing the evolutionary changes in the environment. External environment analysis provides the company with the unique insight into the changes and its implications for the organizations and enables the company to prepare for them, by for example developing the technology and techniques required to understand and respond to these changes. One such technique is scenario planning which studies the relationship between strategy, environment and performance in context of business scope and resource commitment. Organizations can better plan for the future with the help of PESTEL (political, economical, social, technological, ecological and legal forces) analysis, internal resource analysis and the scenario planning. This model helps managers and planners develop a model of external environment in which the business may operate and helps in creation of strategy through which business may retain in its competitive advantage in the changed environment (Fahey, 2000). The theory about formulation of strategy by organizations can be divided into three forms or modes. They are called entrepreneurial mode, adaptive mode and planning mode. Entrepreneurial mode is generally found in the writing of some classical economist and m anagement theorist. According to this mode one bold and risky action by a strong leader on behalf of the organization is strategy. Adaptive mode is the ability and the decision of the organizations to take small steps and adjustments according to the changes in the external environment. Finally the planning mode which is propagated by management science and policy science involves explicit planning for the business based on formal analysis with the aim of integrating strategies for the future. All these modes if combined together and alternatively used by managers according to the changes in the environment can result in a powerful and effective strategy for the business. (Mintzberg, Strategy Making in Three Modes, 1973) There is consensus among all researchers of the theory of organizational behavior and strategic management that changes in the external and external environment results in the ambiguity within and across the organizational structure and hence increases the probabili ty of strategic error. It may even result in economic collapse of the organization. Mintzberg believe that managers within an organization need to develop a CE strategy that top level mangers not only formulate keeping in view the concept of the organization but should also promise minimization of strategic error. The leadership and management of the organizati