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36 Part I • Decision Making and Analytics: An Overview

the Business environment The environment in which organizations operate today
is becoming more and more complex. This complexity creates opportunities on the one
hand and problems on the other. Take globalization as an example. Today, you can eas-
ily find suppliers and customers in many countries, which means you can buy cheaper
materials and sell more of your products and services; great opportunities exist. However,
globalization also means more and stronger competitors. Business environment factors
can be divided into four major categories: markets, consumer demands, technology, and
societal. These categories are summarized in Table 1.1.
Note that the intensity of most of these factors increases with time, leading to
more pressures, more competition, and so on. In addition, organizations and departments
within organizations face decreased budgets and amplified pressures from top managers
to increase performance and profit. In this kind of environment, managers must respond
quickly, innovate, and be agile. Let’s see how they do it.

organizational responses: Be reaCtive, antiCipative, adaptive, and proaCtive
Both private and public organizations are aware of today’s business environment and
pressures. They use different actions to counter the pressures. Vodafone New Zealand
Ltd (Krivda, 2008), for example, turned to BI to improve communication and to support
executives in its effort to retain existing customers and increase revenue from these cus-
tomers. Managers may take other actions, including the following:

• Employ strategic planning.
• Use new and innovative business models.
• Restructure business processes.
• Participate in business alliances.
• Improve corporate information systems.
• Improve partnership relationships.

taBle 1.1 Business Environment Factors That Create Pressures on Organizations
Factor Description
Markets Strong competition
Expanding global markets
Booming electronic markets on the Internet
Innovative marketing methods
Opportunities for outsourcing with IT support
Need for real-time, on-demand transactions
Consumer demands Desire for customization
Desire for quality, diversity of products, and speed of delivery
Customers getting powerful and less loyal
Technology More innovations, new products, and new services
Increasing obsolescence rate
Increasing information overload
Social networking, Web 2.0 and beyond
Societal Growing government regulations and deregulation
Workforce more diversified, older, and composed of more women
Prime concerns of homeland security and terrorist attacks
Necessity of Sarbanes-Oxley Act and other reporting-related legislation
Increasing social responsibility of companies
Greater emphasis on sustainability

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