Answered! Question 32 What is a dynamic environment? How does it affect larger companies versus smaller companies? What is critical to…

Question 32

What is a dynamic environment? How does it affect larger companies versus smaller companies? What is critical to an organization’s survival in a dynamic environment? [3 Marks]

Expert Answer

Dynamic environment means constantly changing business environment because of change in consumer preferences and attitudes. On the other hand target markets with different cultures make the business environment dynamic in nature to which the business managers has to adapt to be successful. The dynamic features of the environment include global competition, information technology, quality service and corporate social responsibility. The significant characteristic of dynamic environment is competition which enables managers to rethink and reshape their strategies to gain more customers and better cater to their needs.

In small company’s technological changes, inflationary trend, competition, infrastructure facilities and changing consumer preferences still remain a problem. These companies do not have the advantage of economies of scale to adapt to these changes .they should learn from the past experience gained in order to survive, make profit and expand their operations by meeting consumer needs and increasing business capacity to adapt to such change.

For large companies market leadership is becoming a difficult target to attain as a strong relationship between profitability and industry is becoming nonexistent. The probability of a market share leader becoming a profitability leader is declining. It is becoming unclear for these companies to know in which industries they are competing.

The companies need to opt for following ways to survive and thrive in today’s dynamic environment:

Accept the fast pace change and adapt to such change with similar speed and accept that future is hard to predict
Constant innovation is important to keep up with the fast changing environment. Employees need to be motivated to innovate. Communication flow should be free to transfer knowledge.
Organization structure requires a change from being bureaucratic to agile
Constantly scan the environment and find new ways to meet the customer needs rather than just focusing on improving operations and efficiency.

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