uncertainty

Every business today deals with uncertainty in the future and every firm tries to reduce it as much as possible in order to prevent itself from the effects of uncertainty. Uncertainty in a way is the lack of certainty. In other words having limited knowledge about the present state and future outcome. This limited knowledge for companies becomes dangerous when they do not know what is going to happen in the future. Firms mostly used traditional approach all their life but since all the uncertainties cannot be forecasted by it other approaches are used as well.

Traditional approaches to strategic planning under uncertainty require accurate predictions, which lead companies underestimating uncertainty that can be very harmful. Underestimating uncertainty leads to strategies that neither protects nor take the benefits of opportunities provided by high-level uncertainty. Company work in two ways ‘wait and see ‘ strategy and ‘just do it ‘ strategy. Under the wait and see approach until the future becomes clear large investments are post ponded which can lead to a big opportunity for the rivals. Whereas under just do it approach executives place misinformed bets on the emerging markets which can lead to record write-offs. Uncertainty is very tricky when it comes to taking a measure if the managers are risk averse and think that the environment is uncertain and do not follow their instincts experience judgment paralysis.

Types Of Uncertainty

There is a possibility to identify the market demographics or other clear trends that can help for determining the potential demand for the products and services. The Unknown is the host of factors that are presently not known. But when right analysis is done they become Knowable Even after ...

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... a 20 % of uncertainty

Strategic Moves

Portfolio Of Actions

No- Regret moves – These are strategic decisions that have Positive results in any situation. This is one of the most essential element of any strategy Competitor intelligence and cost cutting initiatives are examples of this strategic move

Options- It is very strong analytical tool with good Information technology which enables companies to ramp up or scale back their investments later as the market evolves. Provides companies with big pay offs during the best situation and minimizes losses in the worst situation

Bets – These are large commitments which result in Big payoffs and big losses in different situations. During shaping the future strategy bets are usually involved more than adapting and reserving right to play. For example acquisitions and Major capital investment can be described as bets.