1.

0 INTRODUCTION

Business organizations are in consistent changes, when they go up against new

difficulties and adjust to the turmoil of their working environment (Oreg & Berson, 2011).
In general, the organizational changes refer to the changes in their management style,
which can be in terms of their resources, budget, business strategy, supply chain
management and many more, these changes may occur depending on the
organizations in which they operate (Örtenblad, 2004). Changes in the organization
bare its risks, as the changes can be difficult to effectively accomplish as proved by the
outcome of the change endeavors embraced by the organization (Grimolizzi-Jensen,
2015). Similarly, changes in the organization is proven successful even though the rate
of failure is high because of the organizational leader; where the leader understand
when the changes is needed and take the necessary initiative for the changes to occur
and furthermore, the leader takes responsibility for its plan, leading and support the
changes with proper framework (Haque & M.M, 2008)

However, one the key element that causes the organization to change is environmental
uncertainty. The idea of uncertainty has been focusing in many research activities that
concentrated on the structure of the relationship between organization and environment
(Smircich and Stubbard, 1985). Therefore, continuing in the rise of dynamism and
complexity in the environment, where business organizations operates will turn out to be
progressively uncertain. As a result, management of uncertainty, will keep on being the
primary undertaking of management including the development of mechanism to
lessen, retain, counter, or completely avoid it (Jauch and Kraft 1986).

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2.0 IMPACT OF ENVIRONMENTAL UNCERTAINTY ON ORGANIZATION CHANGE

Uncertainties happen due to lacking in information and have not enough

knowledge and experience in decision-making (Duncan, 1972). It is also assumed that
uncertainty can be a reason for unclear and complex relationship between the
organization and the environment; internal operation of the organization and many more
(Collis, 1992). Furthermore, uncertainty is additionally seen as a substantial feature of
the external environment (Milliken, 1987) such as political, economic, social,
technology, environment and legal.

2.1 Political Uncertainty

The impact Political environment of a country can affect significantly to

business organization, which may lead to risk factor and cause them to endure losses a
and that directly impact on the economy of the country. Moreover, legislative issues are
a fundamental cause for uncertainty, since government officials outline the institutional
environment of organizations by, like, setting up the taxes and framework directions and
labor market (Rime, 2016).

U.S Presidential Election 2016, Republican candidate Donald Trump elected as the 45th
President of the United States, by defeating Hillary Clinton. During his campaign
President Trump, promised to bring many changes in policies, infrastructure, trade
deals and many more (BBC, 2017). When the former President ended his term in
January 2017, and President Trump took over the Oval office he began to execute his
action on changing the polies that Obama administration passed (White House, 2017),
such as, overtime regulation of DOL (U.S Department of Labor), the Affordable Care
Act, Immigration law and many more (Uzialko, 2017).

Considering change in Immigration Law, this new law will affect the reputation of the
U.S.A in a negative manner, as a good place to do business. Moreover, CEO of
Facebook, Google, Goldman Sachs and many more agree this statement; because they
might lose their key employees and face difficulties attracting potential employee
(Wharton university of Pennsylvania, 2017). The new law affects both big and small
businesses across the country (Dishman, 2017). Hence, this change will affect

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businesses entirely, now the organization need to come up with alternate solution for
the affected employees, as a result organizational forced to change their plan. In U.S
there are huge number of foreign employees with H1B visa. Therefor, there might be
possibilities those employees with H1B visa may get into problem with the new policy.
That will create major problems for HRM department. Based on research 68% of HR
manager said that they will difficulties filling those empty sits, especially in engineering
sectors (Geier, 2016). In this case HR department along with government should come
up with new policies and strategy to alleviate the problem.

Another example, building a wall U.S-Mexico border, the following step taken by
President Trump, may give rise to a trade war among US and Mexico, and this shows a
strong negative impact for the organization that do business with Mexico, because
Mexico is 3rd largest trading partner with the U.S.A (Chopra and Avgerinos, 2017), if this
is the case then trading organizations, transport organization, and many will suffer the
consequences, resulting damaging in sales, that leads in decline in profits.
(business.gov.nz, 2017). If the hold of doing business for long term that entirely depend
on Mexico-U.S. relationship, then there might be possibility that the organization may
undergo bankruptcy or may lead to downsizing of their organization, where the
organization will be forced to cut cost by laying off its employees (Woody, 2015).

Another factor is political risk, China is especially perilous regarding political hazard.
The likelihood of nationalization of business organizations should be considered,
because in 1994 its already seen happening in China. Thus, there are the dangers of
expropriation, appropriation, cash capricious and contract disavowal(China Political Risk
Management, 2009). Currency downgrading and uncontrolled inflation are conceivable
situations in numerous nations, that causing problems for insurance limits and many
more. The political risk in China quite unique, where central, provincial, and local
government fight for appropriate policies. Thus, it makes the organization in China
having a difficult time for operating their business, as they often undergo many changes
in their business plan according to the policies of the country (The Economist, 2009).
For example, as there risk in their political sector, the foreign organizations are constant
in fear that did local governance have different opinion in the policies than that of central

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government, so in order to be in safe side, the organizations spends huge amount
capital for the political party, so that they can do business comfortably, on spending lots
of capital in politics, the finance department in the organization be in tight schedule, so,
they don’t have enough resources for their goal. Therefore, to save money they change
their strategy and start cutting cost (Adam, 2011).

2.2 Economic Uncertainty

Economic perspective and constant augmenting scope of dangers

proceeding to test even the most big and strong organizations, where organizations
face many difficulties as they endeavor to discover development and remain competitive
(Kleiner, 2017). The core problems that an organization faces due to economic
uncertainty are inflation, interest rates, recession, unemployment and many more.

In 2008 the world experienced a great recession that affected every government and
private sector (Amadeo,2017), with Greece suffering the most, where they faced
unemployment by a great margin, very low income, poverty among other thing.
Organization lost their business, as a result of its mounting debt (Kindreich, 2017).
Hence, the above assertion state that economic uncertainty impact on organization
change to adapt the situation.

Economic uncertainty affect inflation, high inflation affects greatly to an

organization because the currency exchange rate increases, export collapse, the price
of the goods and services increased (Burn-Callander, 2015); all these factors change
business plan for every organization. For example, due to inflation the organization
have uncertainty for return of their investment because great number reduces the
purchasing power for the consumer and thus create a huge gap in cash flow in the
market (Wijesekera, 2017). Therefore, in order to cope with the inflation, the retail
business came up certain changes in their business that would help them, such as,
change in their inventory management, pricing and promotions (Forbes, 2008).

Another factor is interest rates, this factor plays major impact on economy, for example,
when the interest rate in increased, the cash flow in the circulation is reduced, thus help

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the to keep the low inflation. Moreover, it also effects the consumer and organizations to
borrow money from the bank or financial institutes, as it becomes more expensive,
hence, causing changing their behavior in spending their money. Furthermore, increase
in organizational expenses, resulting lower profit as they pay their debt with high
interest; finally lowering them to investment in different sector or in the stock market
(Saunders and Cornett, 2008).

High interest rates restrict the business organizations for their investment and research
and development. In increasing in interest rates might build credit defaults in banking
sectors, thus it may drive cost push inflation because of increment in cost related with
higher expenses of business financing (Central Bank of Kenya, 2012). As a result, when
organization does not borrow money from the bank and be tight on their finances, the
organizations undergo in their changes, to avoid slowing down the growth of the
organization and maintain their profit margin (Kisaka, 1999). The changes usually the
organization makes are cutting cost that is office expenses, not hiring part-time
employees, reduce over time payment, dismissal of part-timer, decreasing in
outsourcing and many more (Evans, 2014).

The next factor is unemployment, due to economic uncertainty, the organization are
forced to lay off their employees (Ibrahim et al., 2015). to reduce cost, therefore
meaning in labor market the number of candidates getting jobs and on top that people
getting lay off adding to that number, thus unemployment come into the scene.

At the same time many organization using this increasing in unemployment rate during
economic crisis as advantage, because unemployed workers willing to get a job at low
wage (Bartlett, 2014). So, many organizations lay off some of its employees, whose
performance in the organization low or have bad reputation or demand high wages, to
get suitable candidate at low wages; in this way the organization can reduce their
overhead cost and increase profit (Masaoka, 2009).

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 2.3 Technology Uncertainty

Technological uncertainty includes extra level of external uncertainty to an

organization, industry, or government. Over time in advancement of technology, will
have a tendency to have higher technology uncertainty (Audretsch, 2001). However,
technology uncertainty creates a scope for the organizations, whether or not the
organization will adapt the new technology before their respective competitors
(McMullen and Shepherd, 2006).

It is seen the case of Nokia, Nokia was of leading phone company back in 1998 to
2007, so why Nokia was declined in the market? There are several reasons behind their
failure but one of their core reasons was advancement in the technology. In late 2008
when google released android operating system the mobile phone market dramatically
changed, at that time Nokia’s main competitors was Apple (Singh, 2010). Moreover,
Nokia foresaw the technological advancement, but their major failure was unwillingness
to embrace innovativeness (Savov, 2014); hence, they lagged in terms of software and
hardware from other major player in the market, like Samsung, Sony, HTC, and iPhone.
Due to their market decline – suffering significant loss – the company to was force to lay
off 10,000 workers globally, eventually selling out to Microsoft (Rosoff, 2015).

In the case of Kodak, they were the first one come up with photographic film in form of
roll, cementing itself as a leader. In 1976, they held 90% in the film sales and 85% sales
in camera alone in U.S. therefore, from this figure it can be concluded that the
organizational plan for Kodak was running smoothly (Pangarkar, 2012). Over the period
when there was advancement in the technology sector, caused the analog film to
transform in digital imaging, the company Kodak made a good effort transforming into
digital imaging, but it wasn’t quick enough and that disturbed the market share of the
company. Due to very this reason the company changed their core business model
multiple time with different CEO from 1990 to 2000. Even though, they stick with their
old tradition analog film along with digital imaging (Johnson, 2012). Meanwhile, while
the company was slow in adapting the advancement in technology, other competitors
were able adapt rapidly, through their R&D in imaging, they made a huge impact on the
market. This is where Kodak was lacking far behind, and slowly they began to lose the

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market share; at some point early 2012 the company declared bankruptcy (Usborne,
2012).

Cyber security is major concern, 90% business organizations fear of being cyber-attack,
because they not well prepared protecting their organization. According to a research,
cybercrime cost the world economy more than USD 400 billion (Gabel, Liard and
Orzechowski, 2015). Another event that a hacked send malware though an email to an
employee of steel mill company in Germany, the malware infected their networking
system and caused damage (Scott, 2015). Hence, the organization must undergo
certain changes, to prevent cyber-attack; first they must establish separate department
that involves in IT sectors, big organization like. MNCs spends millions of dollars on
network firewall, organize training sessions to educate its employees regarding cyber-
attack prevention (Saslow,2017).

3.0 CONCLUSION

All these aforementioned factors present a major concern for all organization,
directly impacting their business outcome, which leads to organization changes. A good
organizational leader can foresee and understand the impact of these factor on
business beforehand and take necessary action to change the organization structure,
strategy, and many more, which will help the organization to reach desired goal with
positive attitude.