Impact of Turbulent Environments on Organizations

Environmental dimensions characterize the arrangement of factors within the domains of the organization's environment. Managers of organizations must not only be able to identify environmental factors but must also understand the arrangement of factors to make correct decisions. One of the dimensions is turbulence.

Turbulence is the extent to which environments are being disturbed by an increasing rate of exchanges between factors. Exchanges result from transfers of resources between organizations. As the rate of exchanges increases in the environment, so does the chance that organizations must change their internal operations. For instance, a hundred years ago business firms in the United States were rarely affected by events in the Middle East. As more resource exchanges were made by governments, energy firms, and defense contractors with nations in this region, events in the Middle East had more impact on firms in this country. Chain motels, such as Holiday Inns, for example, were greatly affected by rising oil prices. As the price of gas increased, the number of family vacations decreased. This led to a decline in the number of vacationers seeking lodging at motels.

When turbulence increases in the environment, organizations increasingly must alter their operations to adapt to exchanges that are often far removed from their market. A low degree of turbulence reduces the need for managers to alter their operations.