ENVIRONMENTAL TURBULENCE Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Undergraduate
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Environmental Turbulence

Environmental Turbulence

The advancements experienced within the context of technology have undoubtedly been significant, unprecedented, and with great impacts on virtually all business sectors. Indeed, the various emergent technologies have, in effect, altered the approaches that companies use to compete within their industries. They have also altered the company-customer interaction and engagement as well as the nature of the operations within the particular companies. These digital transformations and associated automation have ensued in a technology disruption whose effects have either been positive or negative depending on an industry’s reaction to this form of environmental turbulence. The Indian IT sector has, for instance, faced negative impacts from this disruption due to its insistence to maintain its traditional model of operation. Indeed, while IT companies across the world embrace machine advancements such as machine learning, and data analytics to predict customer needs and responses to services, Indian IT companies have maintained a model where they wait for the customers to tell them these needs. In essence, the Indian IT sector has lagged in the aspect of transforming its business operations with technology. In essence, the modern technological advancements have resulted in a turbulent business environment that largely features discontinues change. The degree of change within the technology sector has been significant hence great environmental turbulence. As such, this level of turbulence has also brought with it greater threats and opportunities to companies. Walmart is one of the example companies that have positively been affected by the technology changes similar to the Indian IT companies. In particular, Walmart has made use of several technological innovations to tremendously impact on the company’s operational strategy of low pricing by eliminating inventory, purchase, and distribution overhead costs. Walmart is a retail company rather than a technology one, but it has embraced technological advances as a key enabler of its commercial strategies.

In this advancing technology context, companies currently face difficulty predicting the future occurrences from past occurrences. Indeed, this type of change features spontaneity and unexpectedness. As such, there needs to be understanding with regards environmental turbulence. Indeed, turbulence is a significant model for understanding the constraints influencing organizational performance and behavior[ CITATION Sto04 l 1033 ]. A particular level of turbulence exists in all organizational environments. Accordingly, the concept of environmental turbulence references the level of change that occurs within a particular industry or its environment[ CITATION Boy09 l 1033 ]. In essence, the greater the degree of change, the higher the level of turbulence. Continuously, the higher the turbulence levels, the greater the risks or opportunities that a company typically experiences[ CITATION Boy09 l 1033 ].

Three dimensions are indicative of environmental turbulence. They include dynamism, complexity, and unpredictability. Dynamisms references the degree to which the competition in a company’s environment is impacted on by dynamic change. Researchers and critics note that the dynamisms concept brings together at least three environmental change elements[ CITATION Boy09 l 1033 ]. For one, dynamisms involves the ‘frequency’ elements that vary from rarely in a static environment too often in a more dynamic environment. The construal of high frequency is dependent on the periods of occurrence of the external events.

Complexity references the degree of diversification that features in the market, competition, or industry product. In particular, it combines the aspects of some markets, competitors, products, and customers with the extent of the interconnection of each. Walmart exists in a sector where it serves a heterogeneous population characterized by a diversity of needs. Accordingly, it undoubtedly experiences a complex environment in its operations. Such a complexity adds to the company’s burdens in the certain obligation to identify the various population groups it serves. Further, the company carries the burden of highlighting the needs of these diverse groups and consequently designing and providing an assortment of services and products that meet the diverse requirements of the population.

Unpredictability, on the other hand, references the extent to which likely changes in the environment are predictable or unpredictable. Ideally, if the alterations in the external environments are predictable, the consequences on the performance of a particular company are potentially small. Conversely, if the future of a company’s environment features a difficulty in prediction based on informative aspects including experience and current knowledge, then the consequences on the company’s performance faces a high potentiality to be substantial.

Conclusively, Walmart’s macro-environment consists of several factors that are determinants of the company’s success. As such, the assessment and evaluation of Walmart with regards discontinuous change and considering these said factors is founded on the PESTEL/PESTLE model. Indeed, the company continues to face and withstand potential impacts as a leader in the retail industry with regards its natural aspects including political, economic, socio-cultural, technological, ecological, and legal ones. In the contemporary world featuring rapid and significant technological advances and globalization, the PESTEL/PESTLE elements continue to change hence bringing up unprecedented events and situations for Walmart. In essence, these environmental alterations may bring up opportunities or threats for the company, and as such, the obligation for Walmart is to protect itself from potential threats while exploiting the said opportunities. The PESTEL/PESTLE evaluation, therefore, assists in the determination of the environmental factors that are the main priorities in Walmart’s case regarding the discontinuous change and associated environmental turbulence.

In particular, the effects of these three dimensions of environmental turbulence are demonstrable through some already occurring events in Walmart’s case. Indeed, current technology advancements coupled with the constraints removal to communication and transportation systems have enhanced globalization significantly. As such, the potential for a higher level of environmental turbulence has occurred. For instance, the advancements in network technology have helped Walmart break time and space barriers. In particular, the location of the company’s stores is, in the contemporary times, no longer significant. Traditionally, a retail store’s location was critical given its direct influence on sales and customer flows. In the age of large data and information analytics, the network technology advancements have helped Walmart break through the restrictions of geography. Indeed, Walmart has taken full advantage to expand its market globally. In essence, Walmart has stopped its pure reliance on the location with its focus on market-based innovation management.

Technology has also changed the retailer’s selling methods. In particular, technology advancements have changed the company’s customers’ behavior to involve more home shopping rather than store shopping. Indeed, these advancements have helped customers save much time through online shopping. These changes ensued in operational alterations for retailers such as Walmart. Critics forecast that online retail will eventually be the convention of the global business model. Walmart compares poorly to other market players such as Amazon with regards online shopping. Further, the organizational inertia that features within Walmart is a clear barrier for the company’s quick response to take better advantage of the technology advancements[ CITATION SBa13 l 1033 ].

The advancement of information technology goes even further in affecting the human resources in Walmart. Indeed, technology advances have and continue to hold the potential to replace some of the company’s workforce. Additionally, for the remaining employees, the company will face the obligation of consistent and constant training to maintain and develop their competence. However, these human resource changes caused by technology advancement transformations present challenges for Walmart. For instance, the massive amounts of layoffs result in social issues like unemployment; the constant training will also translate to sacrifices with regards time and money for the company.

Technology changes, on the other hand, also hold the potential to lower the profit margins that the company enjoys. Network and information technology changes have offered people more opportunities for finding more product and service information online[ CITATION Leo85 l 1033 ]. Accordingly, the market’s customers have had a relatively easier time to search for the best prices. Further, technology also holds the potential also to lower the costs faced by the company’s competitors including labor force costs, communication costs, searching costs, infrastructures costs, or purchase costs among others. Accordingly, these competitors could also offer the same products and services as Walmart with the same lower prices. Ultimately, the technology changes have ensued in fiercer price wars among retailers, and as a result, there has been a reduction in the profits in the company’s markets. Walmart’s competitive advantage has always been its low pricing. As such, the environmental turbulence with regards technology, the company continues to face more challenges.

To deal with the environmental turbulence caused by technological advancements, Walmart has aimed at exploiting the advantages of these advancements. Indeed, the world and the retail sector have experienced a heightened pervasiveness of the access of broadband internet. Further, there has been a persistent growth of electronic digital commerce. For one, the company uses the “Texlon” barcode system to drive its capacity for inventory management. This system tracks the prices of sales, the levels of inventory for each product while keeping a history of the quantities sold. The system can also record trends as well as forecast future needs. In essence, the system has helped deal with the unpredictability dimension of Walmart’s environmental turbulence.

Walmart also obliges its suppliers to engage with the “Retail Link” digital system to plan, implement, and evaluate their business operations. The company further strengthened its pro-health care, pro-community, and pro-sustainability information on its annual reports, advertisements, and website. This approach helps in dealing with the dynamic dimension in Walmart’s environment as it interacts with diverse populations and changing socioeconomic needs. The company employs a transportation link system based on the internet for moving its goods. For instance, the entire fleet of transport vehicles has been installed with tracking technology. Additionally, the sophistication in the company’s technological supply-chain aims at offering value for Walmart’s shareholders, clientele, and associates, and hence, dealing with the complexity dimension of the particular turbulence.

In addition to the above-discussed technology factor, these factors include the political factors that pertain the government policies regarding Walmart’s business environment. For one, the company faces opportunities in the high political stability in its environment in the countries of operation including Canada and the United States. An additional opportunity is a political support the company as had for its globalization endeavors. Conversely, Walmart also faces the high political pressure for increasing their wages. This political aspect is a particular threat since a higher wage structure is an obvious contrast to the essential operation trait that is cost minimization in the company’s strategy.

Walmart also faces changes in the economic factors of its environment that also bring with them significant pressure. In essence, any economic change results in alterations to Walmart’s revenues. An analysis reveals that the company mainly faces opportunities regarding this factors. For one, Walmart operates in the main economies that are financially stable. Additionally, the continuous advancements of the developing countries present opportunities for the company[ CITATION Fer06 l 1033 ]. The reducing unemployment levels in its main market, the United States, also offer an opportunity. As such, the changes in these economic factors show a need for Walmart to take advantage of the opportunities presented globally.

Sociocultural factors, on the other hand, specifically consist Walmart’s influence on the preferences and perceptions of the company’s consumers in its business environment. The analysis reveals the trends of cultural diversity, healthy lifestyle, and urban migration as the main social external factors in the macro environment of Walmart. Ideally, all these factors constitute opportunities for the company. In particular, Walmart can, for instance, diversify its product range to fulfill the diverse cultural preferences. The company can also increase and diversify its offers of health products. Additionally, Walmart can fine-tune its strategies to take advantage of the increased consumer demand in urban areas and their surroundings.

Ecological factors in Walmart’s case regard the concerns about environmental conservation. Indeed, the conservation of the environment is, in the contemporary world, a popular and critical principle[ CITATION For00 l 1033 ]. The external ecological elements in the company’s macro environment include the trend of business sustainability that presents an opportunity. They also consist the trend of the development of products that are environmentally friendly that also presents an opportunity for exploitation by the company. In essence, Walmart is obligated to improve its operational efficiency in the bid for the attaining of sustainability in its business. This efficiency achievement is possible through the engagement of technological innovation or an improvement in the company standards and policies regarding the products it sells in its stores. The business efficiency will ultimately strengthen the company in its endeavors to address the ecological factors.

In conclusion, the advancements experienced within the context of technology have undoubtedly been significant, unprecedented, and with great impacts on virtually all business sectors. Indeed, the many new technologies have, in effect, altered the approaches that companies use to compete within their industries. They have also altered the company-customer interaction and engagement as well as the nature of the operations within the particular companies. These digital transformations and associated automation have ensued in a technology disruption whose effects have either been positive or negative depending on an industry’s reaction to this form of environmental turbulence. The Indian IT sector has, for instance, faced negative impacts from this disruption due to its insistence to maintain its traditional model of operation. In essence, the modern technological advancements have resulted in a turbulent business environment that largely features discontinue change. Walmart is one of the example companies that have positively been affected by the technology changes similar to the Indian IT companies. In particular, Walmart has made use of several technological innovations to tremendously impact on the company’s operational strategy of low pricing by eliminating inventory, purchase, and distribution overhead costs. Walmart is a retail company rather than a technology one, but it has embraced technological advances as a key enabler of its commercial strategies.

References

Banjo, S. (2013). Walmart’s E-Stumble with Amazon. The Wall Street Journal.

Boyne, G. A., & Meier, K. J. (2009). Environmental Turbulence, Organizational Stability, and Public Service Performance. Administration & Society, 40(8), 799-824.

Fernandez, S., & Rainey, H. (2006). Managing successful organizational change in the public sector. Public Administration Review, 66, 168-176.

Forte, M., Hoffman, J., Lamont, B., & Brockman, E. (2000). Organizational form and environment: An analysis of between-form and within-form responses to environmental. Strategic Management Journal, 21, 753-773.

Leonard-Barton, D., & Kraus, W. A. (1985). Implementing New Technology. Havard Business Review. Retrieved from https://hbr.org/1985/11/implementing-new-technology

Stonebraker, P. W., & Liao, J. (2004). Environmental turbulence, strategic orientation: Modeling supply chain integration. International Journal of Operations & Production Management, 24(10), 1037-1054.