Business
Market Uncertainty
Market uncertainty refers to the unpredictability of market conditions, which can make it difficult for businesses to make informed decisions about investments, pricing, and other strategic choices. This uncertainty can be caused by a variety of factors, including economic instability, political turmoil, and changes in consumer behavior.
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6 Key excerpts on "Market Uncertainty"
eBook - PDFInterorganizational Information Systems for the Efficient Utilization of Renewable Resources
Insights from Networks in the Wood Industry
- (Author)
- 2017(Publication Date)
- Cuvillier Verlag(Publisher)
These factors reflect the dimensions of EU and have been regarded as being most relevant to supply chain contexts and the information processing needs of organizations (Bensaou and Anderson 1999; Bensaou and Venkatraman 1996; Chen and Paulraj 2004; Davis 1993; Fynes et al. 2004; Heide and John 1990; Premkumar et al. 2005). Technological uncertainty is defined as the extent of technological changes evident within an industry (Chen and Paulraj 2004). It refers to the technical level of future product and process changes as well as the inability to accurately forecast the technical or design requirements for the product (Fynes et al. 2004; Premkumar et al. 2005). Demand uncertainty reflects changes in demand for the processed product and the inability to accurately predict these fluctuations, which may result in forecast errors (Premkumar et al. 2005; Walker and Weber 1987). These forecast errors are influenced by unknown or unpredictable variations in both the quantity and timing of demand that is experienced in a supply chain (Fynes et al. 2004). Supply uncertainty is similar to demand uncertainty, in that it is also related to the unpredictability of quantity and timing (Fynes et al. 2004). However, in contrast to demand uncertainty, it represents the dyna-misms in supply in terms of availability, stability, and consistency in quality that influence timeliness and inspection requirements (Chen and Paulraj 2004; Premkumar et al. 2005). Prod-uct complexity also contributes to uncertainty in supply chains (Premkumar et al. 2005) and is defined as the degree of customizability, intricacy, and variety (Sancha et al. 2014). It also refers to the nature of the product in terms of the diversity of inputs as well as the adjustments required from suppliers (Wong et al. 2012).
eBook - PDFHarvard Business Essentials, Decision Making
5 Steps to Better Results
- (Author)
- 2005(Publication Date)
- Harvard Business Review Press(Publisher)
The Uncertainty Problem Key Topics Covered in This Chapter • A three-step process for dealing with decision uncertainty • Business tactics for dealing with uncertainty • How and when to follow your intuition How to Deal with Unknowns 7 I f you are like most people, uncertainty—that is, risk— is a major impediment to making good decisions—or to making decisions at all. Every decision involves a trip through foggy patches of uncertainty because decisions are about the future, an unwritten story for which there are no facts. Most of us rely on what we know about the past to provide in-sights into the future. What we know of the past and the present can help us understand where we are, where we have been, and what the general trajectory of our journey looks like. But the past and present provide nothing more than hints about the future. As Coleridge put it, “History is a lantern at the stern of a ship, revealing only where it has been,” casting only a dim light on the course ahead. Consider these typical examples of decision uncertainties: Yes, we can raise our prices, but how will our customers respond? Should I order one thousand units or five thousand? I’ll get a volume discount on the larger order, and that will save me money on every unit.That’s certain. But I’m not sure I can sell five thousand without cutting the price. We like this strategic plan. It seems sound, and it will differentiate us in a way that customers will appreciate. But our competitors aren’t stupid; they won’t sit on their hands and let us run all over them. Can anyone tell me what our competitors are likely to do to counter our new strategy? Perhaps they are already making moves we don’t know about. Given the current exchange rate, I should buy a $100,000 ten-year U.S.Treasury note. My euros can buy more in the United States for less than they could last year. But if the U.S. dollar continues to weaken against the euro, the buying power of my interest income here in Europe will drop with it.
eBook - PDFNavigating Strategic Decisions
The Power of Sound Analysis and Forecasting
- John E. Triantis(Author)
- 2013(Publication Date)
- Productivity Press(Publisher)
237 © 2010 Taylor & Francis Group, LLC 14 Uncertainty and Risk Management Risk is present in every strategic decision due to, among other factors, the long timelines involved in strategic projects. There are several definitions of risk and they vary by application and situation and so is the case with uncertainty. In fact, risk and uncertainty are incorrectly used interchange-ably to describe lack of clarity, predictability, and potential for loss. Also, risk management and contingency planning are considered the same. The prevailing view is that risk is a problem that can be avoided or mitigated, while another view describes risk as a situation that could lead to adverse consequences if not addressed. Risk is also portrayed as the threat that some unexpected event, intervention, or issue will adversely affect a company’s ability to achieve its objectives. Others char-acterize risk as the exposure of decisions to unintended losses in future projects or as what one pays in exchange for higher potential returns when the future state or outcome is not known for certain. In all definitions, the two components of risk are the losses that can be caused by some event and the probability of the event occurring. To clarify the meaning of terms and their use in this chapter, we give the definitions as used by risk management teams. Uncertainty is inability to determine the correct future state or to predict the outcome of a decision, and it is characterized by inability to assign probability to the occurrence of outcomes. Uncertainty is broader than risk and may or may not involve risk. The measurement of uncertainty consists of defining possible outcomes and the prospect of each outcome occurring. However, in strategic decision forecasting (SDF), Charlie Sheen’s description of uncertainty as “a sign of humility and humility is just the ability or the willingness to learn” is probably the most insightful and useful definition.
eBook - PDF- Kumar, K Nirmal Ravi(Authors)
- 2021(Publication Date)
- Daya Publishing House(Publisher)
8: Risk and Uncertainity in Farm Business We know, farmers make decisions in a risky environment every day. The consequences of their decisions are generally not known when the decisions are made. Furthermore, the outcome may be better or worse than expected. Farmers have little control over the market forces that drive commodity prices. Production levels and market supply and demand changes can cause large and unforeseen swings in prices. Variability of yields of crops and prices of commodities are the biggest sources of risk in agriculture. Furthermore, increasing global interaction in commodity markets and Governmental influences add to the uncertainty surrounding market prices. Changes in consumers’ incomes, stability of the Government, trade policies and exchange rates all affect demand for commodities and, by extension, commodity prices. These and other unpredictable factors make price forecasting a difficult and volatile practice. Since, input prices translate to costs for farmers and output prices translate to revenues for farmer, unfavorable prices on either side can be devastating to an agricultural operation. Other factors like technological changes, institutional factors, legal and social concerns etc. , also contribute to the risk environment for farmers in farm-business. All these concerns or factors influence the farm-business in two ways: whether there is a high probability of these adverse consequences and would those adverse consequences significantly disrupt the farm-business. It is, therefore, imperative for farmers to manage risk both on the input and the output sides in order to ensure long-term profitability of the farm-business. ‘Risk’ and ‘Uncertainty’ are two terms basic to any decision making framework. Risk can be defined as an imperfect knowledge situation, where the probabilities of the possible outcomes are known. Even Uncertainty is also an imperfect knowledge situation, but the probabilities of the possible outcomes are unknown.
eBook - PDFFlexibility
Flexible Companies for the Uncertain World
- Gill Eapen(Author)
- 2009(Publication Date)
- CRC Press(Publisher)
As the world gets smaller and the differences between real and finan-cial assets become increasingly blurry, we have to accept that uncertainty will increase. Free flow of information and the ability to quickly react to it through financial instruments will amplify small shocks in the economy. Organizations should take existing and increasing uncertainty in all aspects of business as a given. Successful organizations will create structure, sys-tems, and strategies to cope with uncertainty rather than focusing on any attempts to quell it. It is impossible to avoid or ameliorate uncertainty in the modern world, just as we have been unable to architect stability in weather systems. Uncertainty is not “bad,” but rather it is an opportunity for those organizations that exhibit flexibility to create value by managing it. As an example of managing uncertainty, consider the Aluminum Can Company, a U.S. company that produces aluminum cans and sells them to food packaging and distributing companies. This company is subjected to many uncertainties such as the cost and availability of raw materials (alu-minum), cost of electricity and fuel used in the production processes, and the demand and price for the finished good (aluminum cans). Some of these uncertainties are driven by macroeconomic factors. For example, the cost of aluminum as well as the price of electricity and fuel may be driven by supply and demand and inflation that may affect overall price levels. The supply and demand are also driven by the business cycle. The company is likely a “price taker” in these markets for raw materials and it cannot influ-ence prices much by itself since it is a small player in the global market for aluminum. The United States is the largest producer of aluminum with over $30 billion in use and exports, with worldwide production doubling that, but only about 10% of this production actually goes into aluminum cans.
Available until 5 Dec |Learn more- Gavin Shaddick, James V. Zidek(Authors)
- 2015(Publication Date)
- Chapman and Hall/CRC(Publisher)
Chapter 3 The importance of uncertainty 3.1 Overview Uncertainty is a topic that permeates all scientific inquiry and its importance is mag-nified when the results are applied in decision-making, which in this setting will involve legislation, regulations and designing public policy. Despite the general importance of the concept of ‘uncertainty’, its meaning lacks a universally agreed on definition. In fact it shares its general lack of definition with ‘information’, as described by the late Debabrata Basu (Basu, 1975): “But what is information? No other concept in statistics is more elusive in its meaning and less amenable to a generally agreed definition.” It has been described in various ways including ‘incomplete knowledge in relation to a specified objective’ which arises ‘due to a lack of knowledge regarding an unknown quantity’ (Bernardo & Smith, 2009). However, the lack of a clear cut definition has not stopped people from taxonomizing it! Thus we have for example the distinction between aleatory (stochastic) and epistemic (subjective) uncertainty (Helton, 1997). It seems generally agreed that some aspects of uncertainty are quantifiable while oth-ers are inherently qualitative, that is not subject to quantification. The latter would, for example, include framing the problem to be investigated by defining the system boundaries and explicating the role of values (van der Sluijs et al., 2005). Both qual-itative and quantitative aspects of uncertainty need to be taken into account within environmental risk analyses. There will often be intangible sources of uncertainty which will arise through the subjective judgements that are sometimes required to estimate the nature and mag-nitude of empirical quantities where other methods are not appropriate. Uncertainty may arise as a result of imprecise language in describing the quantity of interest and disagreement about interpretation of available evidence.
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