Environment Uncertainty
Introduction
Environment uncertainty is a phenomenon used to refer to conditions that are constantly changing in the interior of a business environment due to its inability to forecast accurately. The inability is due to insufficient information that minimizes one’s ability to predict correctly. Besides, the term uncertainty covers a wide range of activities which includes business risks. More so, the risk is a combination of two or more states that can be determined with the approach of uncertainty. The primary reason for environmental uncertainty is the presence of weak experimental, logical reasons and knowledge. The uncertainty starts as a result of ignorance in routine activities that later covers the strategic decisions a company engages in. lack of knowledge regarding the uncertainty incurs an organization additional cost. The cost rises due to the practice of unanticipated results, lost opportunities and negative effects in a firm (Samsami et al., 2015). The objective of this essay is to discuss the environmental uncertainty and explore ways that managers engage in to prepare for such situations.
How Organization Managers Prepare for Environmental Uncertainty
The managers of the Shell company mainly engage in scenario planning as a preparation method for future environmental uncertainties. The company begins by educating their workers on matters related to risk analysis and uncertainties that are likely to face in the future. Besides, the company plans for items that are unknown rather than pay much attention to those that are known (Shell, 0:8- 5:07). Intellectual preparations are other measures the managers use in scenario planning intending to prepare for future environmental uncertainty. Besides, they promote an understanding of how the company deals with risks to educate other members on the measures that should be employed when a company faces such events.
The scenarios that Shell company management has in action include the development of natural gas in China. In conjunction with the Development Research Centre (DRC) Shell company examines the ways natural gas can evolve as a conventional energy source in China. It is the substitute for coal since it is easier to transport, its cleaner and more efficient. The company plans to increase the energy mix to about 10% this year. The joint study promotes recommendations that support environmental regulations like effective carbon pricing. It also encourages the reforms of the gas market mechanism that regulate various institutions thus, creating competition against their rivals as they are more diversified (What are Shell Scenarios? 0:15-5:02).
The company also prepares for environmental uncertainty by studying the scenario in exploring German’s energy pathways. It recognizes the power of global climatic challenge and therefore generates ways that put them ahead in terms of limiting chances of being affected by global warming. Since 2015, the company established an agreement in Paris that has a global action plan that ensures global warming is below two degrees Celsius through the use of affordable sustainable energy system. So far the company has managed to generate power in German with an increase in heating and mobility.
Conclusion
In summary, environment uncertainty is the activities that emerge due to changes in the business environment which were not well addressed while the managers were planning for future risks. A company like Shell has an able management team that has guidelines in place for dealing with the uncertainty. First, the team developed scenario planning where the workers are taught how to deal and prepare for risks. The scenario planning includes the gas project in China and the study on global warming.
References
Samsami, F., Khodadad Hosseini, S. H., Kordnaeij, A., & Azar, A. (2015). Managing environmental uncertainty: From conceptual review to strategic management point of view. International Journal of Business and Management, 10(7). https://doi.org/10.5539/ijbm.v10n7p215
Shell. (2013). Impact and Influence of Shell Scenarios [Video]. YouTube.
What are shell scenarios? (n.d.). Shell Global | Shell Global. https://www.shell.com/energy-and-innovation/the-energy-future/scenarios/what-are-scenarios.html