Applying chaos theory to ailing economy

Put simply, the business environment is an affront to Foreign Direct Investment (F-DI), let alone the competitiveness of the industrial sector. Zim-babwe has thus become an uncompetitive country in the global economy.
Year-on-year inflation is pitted at above 230 million percent, and is the highest ever realised in the world economies. The Zim-babwean dollar has nose-dived against major currencies to hit rock bottom and still continues on a windfall.
Our GDP is on the large negative points and we are also operating on a negative BOP position.
Chaos theory: What is it?
Notably, chaos theory is also a soft computing concept. As such it borders on uncertainty and mimics the way the human mind reasons.
Some scholars have defined it as the qualitative study of an unstable and aperiodic behaviour in deterministic and non-linear dynamic systems.
These systems are highly sensitive to initial conditions hence, their proneness to the Butterfly Effect — a concept that seeks to explain how changes on a small scale can influence things on a large scale.
There are many areas where the chaos theory concept can be possibly applied with the possibility of success. One such area is in the prediction of weather patterns. Ano-ther area is in the control of HIV/AIDS.
Regrettably, the current endeavours to control HIV/AIDS seem to fail to recognise the link with the complex societal issues. I shall however, dwell on the business applications of chaos theory in product pricing, remunerations, sales enhancement, and security prices predictions within the context of the chaordic Zimbabwean environment.
Chaos theory and its view of business
The chaos theory regards business organisations as complex, dynamic, non-linear, co-creative and far from equilibrium systems.
The theory further argues that the future performance of businesses cannot be predicted by past and present events and actions.
In a state of chaos, organisations behave in ways, which are simultaneously both unpredictable (chaotic) and patterned (orderly), hence the term chaordic.
Paradigm shift and business
strategy
The volatile business environment in Zim-babwe today calls for supreme adaptation by business. A paradigm shift in the way businesses used to come up with their strategies is undoubtedly imperative.
Innovation-marked strategies especially in the Zimbabwean context should be motivated by the existing “edge of chaos” scenario or rather the low- dimensional chaos.
Application in pricing strategies
In business today, product pricing is based on either the cost plus (mark-up) or the variable costing models.
In this analysis, which is based on market reading among other factors, these two models on their own have become antiquated and their continued use presents more headaches than business solutions in a chaordic environment. In simple terms, businesses are failing to unlock value. Instead, the little value created is being eroded.
Businesses should take advantage of the prevailing chaordic environment and listen to all the noises relevant to product pricing.
Of prime importance is the noise emanating from the fluctuations in inflation figures and that from exc-hange rate volatility. Only then can businesses come up with ‘moving factors’ at any given time.
These ‘moving markers’ that listen to the noise from the business environment plus an appropriate premium can then be used to come up with a correct cash price, which recognises the exc-hange rate at any given time.
The cash realised can then be immediately converted to relatively strong and stable currencies. This way, businesses can thus protect the value of their assets, and even enhance it.
Chaos theory and remunerations strategies
Most employees are short-changed by the remuneration systems of most businesses today. After a week or month’s hard work, employees receive the-ir salaries.
This approach dismally fails to recognise a fundamental principle of the time value of money. By the time employees get their money, in value terms that money will be next to nothing.
It is also imperative that those who are entrusted to negotiate for salary increases on behalf of other employees should actually advocate for deals that recognise the essence of chaos theory.
Again, ‘moving factors’ that listen to the noises from the environment must be key in determining the correct and appropriate salary or wage of an employee.
Organisations must seek to adequately remunerate their employees especially those with key skills in order to enhance productivity.
Other business bpplications of chaos theory
There are many areas in business where the chaos theory can be applied. In sales, this concept can be used in product mix optimisation following the determination of product demand patterns in a chaotic environment.
Another important area of application is the financial markets sector. For example, in the stock market, the theory can be a powerful tool for predicting security prices. If properly applied, the concept can therefore, lead to the availability and enhancement of knowledge relating to our financial markets.
Conclusion
Stakeholders can come up with an array of opportunities within business setups where the chaos theory concept can be applied to add value in this chaordic environment.
Chaos theory might seem a formidable concept to those who are not scientists because it is mostly discussed in the scientific field.
But if it is discussed in such fields and then those discussions end there, such a scenario will not benefit society. It is in this spirit that I decided to demystify the concept and endeavoured to discuss its applications mainly in business.
This is a challenge especially to other fellow scientists to continually seek for areas where our scientific knowledge can be applied in business for the purpose of enhancing value.

l Mathews Matinari is an applied biochemist. He has also studied Project Ma-nagement and is awaiting the completion of MBA.
Feedback: mmatins2000@yahoo.co.uk/011 889 004