First, assess the degree of complexity of the environment for your unit of analysis. Complexity is the number of variables in the environment and their interdependency. It refers to LO5 factors that can influence the operations and outcome of your organization. These may include the industry, competitors, suppliers, the financial system, the human resource talent pool, new technology, prices, quality requirements, financial conditions, governmental relations, and political conditions, among many other factors. Identify external conditions that in a significant way could affect your chosen organization. These should be conditions that you constantly feel you need to scan and monitor.

a. What is the number of critical factors in the firm’s environment? List each factor below and then count to estimate the total number of critical factors.

1: ________________________________________ 2: ________________________________________ 3: ________________________________________ 4: ________________________________________ 5: ________________________________________ etc.

b. What is the overall interdependency among these factors? That is, to what extent is this set of factors interrelated, or correlated with one another? Select an overall rating of:

low, medium, or high.

Now, using Table 3.2, find the complexity score on the scale of 1 to 5. Find the column corresponding to the number of factors in the environment. Find the row corresponding to the extent of interdependency among the factors. Your complexity score is in the cell corresponding to the column and row for your firm.

TABLE 3.2 Complexity scores Interdependency of factors Number of factors in the environment 1–3 4–6 7–9 10–12 >12 Low 1 1 2 2 3 Medium 1 2 3 4 5 High 3 4 4 5 5