ENVIRONMENTAL TURBULENCE

Ansoffintroducesthe conceptof environmental turbulenceto describe thedifferent environments.He classifies the different environments in whichfirmsoperateintofivedistinct turbulencelevels.Atone extremeis thestable, placid environmentwhere nothingchanges;at theotheristhe creative environment, characterized by major technological breakthrough, andsocial political upheavals.
LEVEL 1:Repetitive Environment:
This is the placid environment where nothing ever changes. In a free market economy,veryfew organizationsare operatingin this environmentexcept forsomenot-for-profitorganizations.The museumisanexampleofan organization in this environment.The company operating in a turbulent environment needs a compass rather than a detailed road map for a road map with detailed instructions is of little use when the topography is unknown and fast changing.
LEVEL2:Expanding Environment :- Slow Incremental
This environment is usually found in the segmentofthe economy whichis growing rapidly.In this environment,demand usually exceeds supply, and customers’ needs are basic and undifferentiated. Price is the main determinant in the purchase decision and production efficiency is the key success factor.

Environmental Turbulence Strategic Management

LEVEL 3: Changing Environment :- Fast Incremental
In this environment, customers’ demands are differentiated by different buying power and product preferences. The key success factor shifts from production efficiency to marketing effectiveness.
LEVEL 4:Discontinuous Environment - Predictable
With the emergence of the global market place, influx of foreign competitors,technology substitution, rapid shifts in customers needs, wants and attitudes, and governmental and social changes, the majority of companies today are operating in this complex and discontinuous environment.A recent survey carried out in Singapore showed that more than 70% of the firms in Singapore are operating at a level between 3.5 and 4.5. In this environment, changes are taking place ataratefasterthan the company’s ability to respond and the future is difficult to predict.The complexity and discontinuity of the environmentalsomakeit impossible forcompaniestosucceedsimplyby optimizing on a single success factor as inlevels2and 3.Production efficiency, marketing effectiveness and productresponsiveness are all importantdeterminantsofthe firm’s success, but their relativeimportance are constantly adjusted by management inresponseto changesinthe marketplace.
LEVEL 5: Surpriseful Environment - Unpredictable
Inthisenvironment,technological leadershipisthekeysuccessfactor.Newtechnologiesand new industries developrapidlyandcustomersare prepared to pay for the most advanced technology.It isin thisenvironment thatStevenJob createdthepersonal computer.Inthefirst threelevelsof environmental turbulence,thefuture can be extrapolated from thepastand there arefewsurprises. Rapid corporate growth usually leads to high profitability.The company’s strengths and successful strategies in the past are likely to remain relevant in the future.Inthe environmentsofturbulence levels4and 5, profitsdo not follow growth,extrapolation ofthepast into thefutureisdangerous,surprisesare frequent, historicalstrengthscan becomeweaknessesandwhat were successfulstrategiesinthepastmay not be successful in the future.