Challenges in a Volatile Business Environment
Starting a company can be easy, but navigating it in a volatile environment is a difficult challenge that can be catastrophic. The business board should be mindful of the various pitfalls that could impede the organization's progress, some of which are discussed here. In a world full of unsuccessful efforts, solving these challenges is what guarantees the company's success.
Uncertainty in the Market
Uncertainty is unavoidable in any market environment. It also occurs in the lives of students who are unsure about their future after finishing their studies; whether the time spent in school was worthwhile, and whether they would be working. International students are doubtful when they move to a new country to pursue their studies. They question if they will cope with the new culture or if they will be able to speak the language and so on. These students have to deal with the uncertainty, or they will remain paralyzed, unable to do anything of value as they seek to be successful. When given a chance, uncertainty can stifle growth. Companies face the same situations often. Some changes occur in the business environment that threatens the progress of a company. These changes, in the form of new technology, credit markets, political tensions, and the state of the economy, bring about uncertainty.
In the recent past, uncertainty has hit the business world hard. From the elections in the United States to the Brexit vote in the United Kingdom, many companies are forced to deal with difficult times. The markets remain volatile with many afraid to make investments until they are confident about the outcome. The Brexit vote left many companies contemplating their position in the European Union. They are still wondering if they will continue to trade freely with their neighbors or encounter a change of terms.
Uncertainty is characterized by the reluctance of stakeholders to make decisions that affect the company’s future (Lipshitz & Strauss, 1997). They are unsure about the implications of their decisions in the face of unstable economies, so they choose to sit back. The investments made are few, and therefore the overall economic growth slows down. Consumers are also unwilling to spend, and the cost of capital goes up because uncertainty can increase the probability of default.
Focus on Short-term Goals
During this time of change, most companies choose to focus more on short-term goals rather than long-term ones. This decision is similar to what students facing uncertainty are likely to make. Instead of increasing their employability skills by volunteering in organizations, they focus on passing their exams. While passing exams is essential to the overall success of the student, the real workplace experience helps to increase chances of employment in the long run. In the same way, when companies focus on short-term goals they lose value; a business has no future without long-term goals (Cheng, 2016).
Since uncertainty is inevitable, the managers have to face it to increase the chances of good performance and the overall long-term survival of the company. One way of doing this is through conducting proper quantitative research on the problem at hand then making a decision based on the outcome (Hopper and Spetzler, 2016). Consider a company facing uncertainty about entering a foreign market. Some of the problems cited include; lack of infrastructure, the political climate and the overall economy of the country. The leadership should embark on a research drive that will uncover all the benefits of setting up in the new country. This information would help to weigh out the risks versus the opportunities.
With this knowledge, making a decision in the face of uncertainty is made easier. It is not beneficial to sit back and waste opportunities. The best approach would be to embrace the moment and capitalize on every uncertain environment rather than avoiding it (McGrath and MacMillan, 2000).
Talent Acquisition
Finding and retaining the right talent can be a challenging task for most organizations. Students also share in this challenge after they complete their studies. They struggle to find companies that are a good fit for them. Finding the right talent, for companies, is challenging due to competition from other firms and lack of appropriate skills. The high level of unemployment does not always translate to the availability of the workforce. It is important to find the right talent that fits into the culture of the organization. Such people are of benefit to the company because they tend to stay longer. Just like working for the wrong company is not beneficial to an individual, hiring the wrong person is also costly to the organization. A bad hire cannot identify with the organization's vision and is, therefore, unmotivated, has low productivity and may introduce a negative culture to the other employees (Trehan, 2015).
Beating this challenge would require coming up with talent acquisition strategies which help to identify the right people, with the right skills and the ability to work towards achieving the long-term goals of the company (Singh, 2013). The company should first take an analysis of its current workforce and make a decision on what it needs to do to prepare for future staffing demands (McIntosh, 2016). Next, the recruiters should understand the type of people it seeks which is dependent on the overall culture of the company (Clark, 2014). The company should then embark on building their brand as a suitable employer. There are various ways to go about this. For example, using the employees as brand ambassadors; as they interact with people outside the work environment, they can say something positive about the company and in the process, advertise it to prospective employees.
The company should also engage in creativity during the talent search. There are other talent pools such as social media or social events that can provide reliable employees. Another long-term acquisition strategy lies in scouting for talent in colleges and universities; these places provide the best talent which, when groomed, offer excellent service to the company (Hickins, 2015). The main aim of the talent acquisition strategies is to put the company in a better position to identify, recruit and retain the best that the market has to offer.
Ethical Issues
Ethics in the business arena are changing as competition between different companies force decision-makers to think of ways to get ahead. The pressure to succeed might overshadow the need to do the right thing, and for this reason, managers need to be concerned about ethical issues. Students have their set of values, beliefs, and expectations that guide them towards their goals and better performance. In the same way, a company should have a set of guiding values that govern how they work towards success. Everyone needs to follow these values. Otherwise, unethical practices might arise in the company.
A relevant example of this is the Volkswagen emission scandal of 2015. The German car manufacturer was accused of cheating during emission tests by using software that changed the performance of diesel vehicles thus improving the results (Hotten, 2015). All this was done to market diesel cars to the US market as environmentally safe due to their low emissions. Volkswagen had an existing code of ethics when the scandal happened. This shows that the temptation to sway is all too real especially when there is pressure to perform (Argenti, 2015). All leaders should be aware of this and make steps towards securing their company against unethical practices.
Ethics represents a specific and acceptable set of moral principles designed by the leadership and followed by everyone; they dictate how people in the organization should behave as they work towards achieving the company’s goals (Verbos, et al., 2007). Ethical issues arise when an individual is forced to choose between two alternatives; one is considered right and the other one wrong (Weiss, 2014). Businesses face ethical issues often with the problems emerging from different areas. An accountant might be thinking about whether to ‘cook’ books or present actual financial records. The marketing department may debate on withholding sensitive information about a particular product in order to improve sales. The human resource manager could deliberate on whether to promote an employee based on affection or qualifications. All these represent ethical issues that have the potential to destroy the reputation of a company and lead to its downfall. A good example is the Enron scandal of 2001 where the company collapsed due to the unethical practices of the officials which included; manipulation of information, abuse of power, poor oversight and greed (Johnson, 2003).
The ethical state of a company is the responsibility of the management. It should set the example for the rest of the employees, and the effects will trickle down. No one will act unethically when the executives act otherwise. The company should cultivate its ethical culture to influence the ethical decision-making of employees (Trevino & Nelson, 2011). The management should enforce this culture by communicating the need for ethical behavior at all times (Cavico & Mujtaba, 2016). These actions will increase the chances of eliminating the repeated occurrence of ethical issues.
Competitive Advantage
Just like students compete for available jobs after graduation, companies also compete to stay ahead of their rivals. They seek to stand out from the crowd in an effort to attract and retain customers thus registering high returns. The top priority of any company is to make profits and achieving this is not easy especially with numerous competitors offering the same thing. It becomes difficult to create a consistent customer base when they have a broad array of options at their disposal. As competition between companies becomes vicious, the management should spend time in trying to come up with ways to stay relevant in the market.
A company needs to establish itself as a brand with the capacity to foster trust with the consumers so that they recognize it as a viable option in competitive markets (Ghodeswar, 2008). Failure to do this results in the collapse of the business because it lacks the capacity to compete in the market. This makes proper competitive positioning an important aspect of any business venture. The company needs to understand the external nature of competition and come up with guidelines that differentiate it from its competitors; this framework is a competitive strategy which when implemented correctly helps to establish long-term superiority over rivals (Davis & Olson, 2008). The guidelines provide direction to various departments of the company including how to market products, managing finances, and profitable operating strategies.
A proper competitive strategy addresses important issues such as; where the company competes, the approach to be used, how to respond to competitors, and the model for growth. Once this is done, the leadership chooses the right competitive strategy based on their goals.
A cost competitive advantage focuses on providing consumers with products at the lowest price through analysis of the value chain, strategic positioning and cost drivers (Shank & Govindarajan, 1993). This strategy works when the target market is populous. The sales made on a large scale result in high profits. Quality competitive advantage involves the decision to produce quality products designed for a distinct demographic of the market. These people are not afraid to spend more to get a quality product. The company, therefore, undertakes research and development to come up with superior products that appeal to this niche (Meulenbroeks, 1998). Differentiation competitive strategy uses more than one approach to get the attention of the consumer. In companies that produce more than one product, each product is designed to target a particular market with different features and price ranges.
Above all, a competitive strategy should work towards giving a company sustained competitive advantage. This is the best way to measure the success of the strategy chosen. It ensures the long-term success of a company through offering a different way of doing things that sets it apart from others.
To sum up, a business faces negative forces from various sectors. It is the responsibility of the decision-makers to point these problems out and find ways to tackle them so that the company can thrive.
References
Argenti, P. (2015, October 13). The biggest culprit in VW’s emissions scandal. Fortune.com. Retrieved from http://fortune.com/2015/10/13/biggest-culprit-in-volkswagen-emissions-scandal/
Cavico, F. J., & Mujtaba, B. G. (2016). Volkswagen Emissions Scandal: A Global Case Study of Legal, Ethical, and Practical Consequences and Recommendations for Sustainable Management. Global Journal of Research in Business & Management, 4(2), 303-311. Retrieved from http://gpcpublishing.com/index.php?journal=gjrbm&page=article&op=view&path%5B%5D=431&path%5B%5D=pdf_34
Cheng, R. (2016). In times of uncertainty, keep a long-term financial perspective. Csmonitor.com. Retrieved from http://www.csmonitor.com/Business/Saving-Money/2016/0727/In-times-of-uncertainty-keep-a-long-term-financial-perspective
Clark, D. (2014, Jan 22). Three Ways Your Company Can Attract the Right Talent. Forbes.com. Retrieved from, https://www.forbes.com/sites/dorieclark/2014/01/22/three-ways-your-company-can-attract-the-right-talent/#762a21ce5bc7
Davis, A., & Olson, E. M., (2008). Critical competitive strategy issues every entrepreneur should consider before going into business. Business Horizons, 51(3), 211-221. doi: 10.1016/j.bushor.2008.01.010
Ghodeswar, B. M. (2008). Building Brand Identity in Competitive Markets: A Conceptual Model. Journal of Product & Brand Management, 17(1), 4-12. doi: 10.1108/10610420810856468
Hickins, M. (2015, Mar 26). Oracle Campus Hiring Strategy Is ‘Unique’. Forbes.com. Retrieved from, https://www.forbes.com/sites/oracle/2015/03/26/oracle-campus-hiring-strategy-is-unique/#7a17bee4471c
Hopper, P., & Spetzler, C. (2016, May 18). You Can’t Make Good Predictions without Embracing Uncertainty. Harvard Business Review. Retrieved from https://hbr.org/2016/05/you-cant-make-good-predictions-without-embracing-uncertainty
Hotten, R. (2015, Dec 10). Volkswagen: the scandal explained. BBC.com. Retrieved from http://www.bbc.com/news/business-34324772
Johnson, C. (2003). Enron’s ethical collapse: Lessons for leadership educators. Journal of Leadership Education, 2(1), 45-57. Retrieved from http://www.journalofleadershiped.org/attachments/article/30/JOLE_2_1_Johnson.pdf
Lipshitz, R., & Strauss, O. (1997). Coping with uncertainty: A naturalistic decision-making analysis. Organizational Behavior and Human Decision Processes, 69(2), 149-163. doi: 10.1006/obhd.1997.2679
MacGrath, R. G., & MacMillan, I. C. (2004). The entrepreneurial mindset: strategies for continuously creating opportunity in an age of uncertainty. Boston, MA: Harvard Business School Press.
McIntosh, L. (2016, Aug 18). Six Key Elements of an Effective Talent Acquisition Strategy. Society for Human Resource Management. Retrieved from, http://greenvillehr.org/images/downloads/2016_Conference_Certificate_and_Presentations/2._1c._regency_e___mcintosh___six_key_elements_of_an_effective_talent_acquisition_strategy_august_18_2016.pdf
Meulenbroeks, C. (1998). Creating a Competitive Advantage through Quality. Creativity and Innovation Management, 7(3), 148-158. doi: 10.1111/1467-8691.00103
Shank, J. K., & Govindarajan, V. (1993). Strategic Cost Management: The New Tool for Competitive Advantage. New York, NY: Simon and Schuster.
Singh, M. (2013). Talent Acquisition and Retention. International Journal of Advances In Computing And Management, 2(1), 38-41. Retrieved from http://www.dypimca.ac.in/images/Downloads/Journal/IJACM_vol2.pdf#page=42
Trehan, R. (2015, Mar). The Importance of Finding the Right Talent. Linkedin.com. Retrieved from https://www.linkedin.com/pulse/importance-finding-right-talent-rita-trehan
Trevino, L. K., & Nelson, K. A. (2011). Managing Business Ethics: Straight Talk about How to Do It Right (5th ed). John Wiley & Sons, Inc.
Verbos, A. K., Gerard, J. A., Forshey, P. R., Harding, C. S., & Miller, J. S. (2007). The positive ethical organization: Enacting a living code of ethics and ethical organizational identity. Journal of Business Ethics, 76(1), 17-33. doi: 10.1007/s10551-006-9275-2
Weiss, J. W. (2014). Business Ethics: A Stakeholder and Issues Management Approach (6th ed). San Francisco, CA: Berret-Koehler Publishers, Inc.
Personal Reflection
I began this assignment by asking myself what I thought were the main issues the speakers wanted to bring forth. I discovered that they were concerned about the success of the students despite the challenges they face, competition for the available jobs, finding employment and the development of beliefs and values. From this result, I sought to make the connection with the business world by asking myself if companies faced related problems. Through some research, I learned that businesses face uncertainty, difficulty in talent acquisition, competition and ethical problems. I went ahead to ask what examples I can cite to prove this connection and what evidence I had to support these problems. I looked through articles, books, and online journals to find news and studies done on these issues. I also asked what effect these issues had on the businesses and how they could be solved. After compiling all the information, I put it down in writing.
