organizations & their environment

8/12/2019 Organizations & Their Environment

1/20

Organizations & their

Environment

Shoaib Ul-Haq

LUMS

1


2/20

(a) Competitors, industry size and

competitiveness, related issues

(b) Suppliers,

manufacturers, real

estate, services

(c) Labor market,

employment agencies,universities, training

schools, employees

in other companies,

unions

(d) Stock markets,

banks, savings and

loans, private

investors(e) Customers, clients,

potential users of products

and services

(f) Techniques of production, science,

research centers, automation new

materials

(g) Recession, unemployment rate,

inflation rate, rate of investment,

economics, growth

(h) City, state, federal laws

and regulations, taxes,

services, court system,

political processes(i) Age, values, beliefs,

education, religion,

work ethic, consumer

and green

movements

(j) Competition from

and acquisition byforeign firms,

entry into overseas

markets, foreign

customs, regulations,

exchange rates

An Organizations Environment

(j)

International

Sector

(d)Financial

Resources

Sector(e)

Market

Sector

(f)

Technology

Sector

(g)Economic

Conditions

Sector

(a)

Industry

Sector

(h)

Government

Sector

(c)

Human Resources

Sector

(b)Raw Materials

Sector

(i)Socio-cultural

Sector

ORGANIZATION

DOMAIN


3/20

External Environment

Environmental Domainis the chosen territory

of action defining the niche and external

sectors with which the organization will

interact to accomplish its goals.


4/20


Sectors are subdivisions of the external

environment that contain similar elements.

Task environment includes sectors with which

the organization interacts directly, usuallyincluding:


5/20


Industry sector

Raw material sector

Market sector

Human sector

International sectors


6/20

General Environment

Includes those sectors that may not have a direct

impact on the daily operations of the firm.

Often included are:

Government sector

Sociocultural sector

Economic conditions

Technology sector

Financial resources sectors


7/20

Market

Sub-environment

Customers Advertising

Competitors agencies

Distribution

system

Manufactur ing

Sub-environment

Labor Raw Suppliers

materials

Production

equipment

Scienti f ic

Sub-environment

Scientific Research

journals centers

Professional

associations

Organizational Departments Differentiate to Meet Needs of

Sub-environments

President

R & D

Division

Sales

Division

Manufacturing

Division


8/20

Differences in Goals and Orientations

Among Organizational Departments

Characteristic

R & D

Department

Manufacturing

Department

Sales

Department

Goals

New

developments,quality

Efficient

production

Customer

satisfaction

Time

Horizon Long Short Short

Interpersonal

Orientation Mostly task Task Social

Formality of

Structure Low High High


9/20

Environmental Uncertainty and

Organizational Integrators

Industry: Plastics Foods Container

EnvironmentalUncertainty High Moderate Low

Departmental

Differentiation High Moderate Low

Percent of

management in

integrating roles22% 17% 0%


10/20

Environmental Uncertainty

Uncertainty means that decision makers have

some degree of insufficient information about

environmental factors, making prediction of

external changes difficult.


11/20


Characteristics of the Environmental domain

that influence uncertainty are:

The extent to which the external domain is simple

or complex.

The extent to which events are stable or unstable.


12/20


Simple Complex Dimensionconcerns heterogeneity

or the number and dissimilarity of external elements

relevant to an organizations operations.

Stable-Unstable Dimensionrefers to whether

elements in the environment are dynamic; the

domain is stable if it remains the same over a period

of months or years.


13/20

Adapting to Environmental

Uncertainty

Organizations need to have the right fit

between the external environment and the

internal structure.

Buffering Department can absorb uncertainty

from the environment by protecting the

technical core from environmental changes

and helping it function efficiently.


14/20


Uncertainty

Boundary-spanning roles link and coordinate

an organization with key elements in the

external environment by:

Bringing into the organization information bout

changes in the environment.

By sending information into the environment that

presents the organization in a favorable light.


15/20


Uncertainty

Environmental uncertainty leads to:

Increased differentiation, which is the differences

in cognitive and emotional orientations among

managers in different functional departments, andthe difference in formal structure among these

departments.


16/20


Uncertainty

With high differentiation, coordination

between departments becomes difficult,

creating greater needs for integration, which is

the quality of collaboration between

departments.


17/20

Organization Forms

Mechanistic: Organic:

Tasks are broken down into

specialized, separate parts.

Tasks are rigidly defined.

There is a strict hierarchy of

authority and control, and

there are many rules.

Knowledge and control of

tasks are centralized at thetop of the organization.

Communication is vertical.

Employees contribute to thecommon task of the

department.

Tasks are adjusted andredefined through teamwork.

There is less hierarchy ofauthority and control, and

there are few rules.

Knowledge and control of

tasks are located anywhere inthe organization.

Communication is horizontal.


18/20

Low Uncertainty

1. Mechanistic structure; formal,

centralized

2. Few departments

3. No integrating roles

4. Current operations orientation

High-Moderate Uncertainty

1. Organic structure, teamwork;

participative, decentralized

2. Few departments, much boundary

spanning

3. Few integrating roles

4. Planning orientation

High Uncertainty

1. Organic structure, teamwork;

participative, decentralized

2. Many departments differentiated,

extensive boundary spanning

3. Many integrating roles

4. Extensive planning, forecasting

Low-Moderate Uncertainty

1. Mechanistic structure; formal,

centralized

2. Many departments, some boundary

spanning

3. Few integrating roles

4. Some Planning

Contingency Framework for

Environmental Uncertainty and

Organizational Responses

ENVIRONMENTAL

CHANGE

STABLE

ENVIRONMENTAL COMPLEXITY

UNSTABLE

SIMPLE COMPLEX


19/20

Organization Strategies for Controlling

the External Environment

EstablishingInterorganizationalLinkages:

Ownership

Contracts, joint

ventures

Cooptation, interlocking

directorates Executive recruitment

Advertising, public

relations

Controlling the

Environmental Domain:

Change of domain

Political activity,regulation

Trade associations

Illegitimate activities


20/20

Relationship Between Environmental

Characteristics and Organizational Actions

Environmental

domain

(ten sectors)

High

complexity

Establishment of favorable linkages:

ownership, strategic alliances, cooptations,

interlocking directorates, executive recruitment,

advertising, and public relations

Organic structure and systems with low

formalization, decentralization,

and low standardization

Many departments and boundary roles

Greater differentiation and more

integrators for internal coordinationHigh

uncertainty

High rate

of change

Scarcity of

valued

resources

Resource

dependence Control of the environmental domain:

change of domain, political activity,

regulation, trade associations, and

illegitimate activities

Environment Organization

organizations & their environment

Documents