Figure 2.3 depicts a simple four-box model abstracting four different types of environment in which organizations may sit. These environments are polar opposites and you may argue that the world is not so simple. Nevertheless, it gives a framework from which to identify some basic factors influencing firm behaviour and to further analyse conditions and consequences. In the figure, environments are classified as stable or dynamic. Stable environments may be complex or simple. Simple stable environments are predictable. Demand for a product or service in this type of environment would be relatively constant with little variation. Another dimension to stable environments are those that can be classified as more complex: they are more difficult to handle but there is still little change over time which allows the organization to predict demand with some accuracy. For example, a seasonal business may have complexities in terms of products offered but peak periods and trough periods will occur with regularity. Stable environments are easier to manage. Dynamic environments pose a challenge for managers. Dynamic environments may also be classified as dynamic or simple. Simple environments are fast moving but they are reasonably easy to predict. For example, many grocery retailers would operate in a fast moving environment but the demand for certain staple foods, soap powder and detergents may be reasonably well predicted. However, by contrast fashion retailing is both complex and dynamic. Complex because customer demand is fickle and fashions change between the time the retailer orders and...