External Environment

Chapter 4 The External Environment The environmental line of business Organization Environment is composed of all elements that exist outside the frontier of the brass that have the potential to affect all or business office of the organization. Its domain is the chosen field of action. The milieu comprises several sectors or subdivisions of the milieu that contain similar elements (ie. industry, raw materials, human resources, grocery store, technology, financial resources, economical conditions, government, sociocultural, and international. childbed Environment includes sectors with which the organization interacts directly and that have a direct intrusion on the organizations ability to achieve its goals. oIndustry, raw materials, market sector and hr and international sectors General Environment includes sectors that might not have a direct impact on the daily mathematical process of a firm but will directly influence it. oGovernment, sociocultural, economic conditi ons, technology, and financial resources sectors International Context oDomestic sectors can be affected by international events Environmental misgivingResponding to the get for discipline. 2 Ways the environment influences organizations (1) the need for information about the environment and (2) the need for resources from the environment. hesitancy applies to sectors that the organization deals with on a regular basis, the task environment, and this must be analyzed along dimensions of stability and degree of suspicion. Simple Complex Dimension concerns environmental complexity, the heterogeneity, or the moment and dissimilarity of outdoor(a) elements relevant to an organizations operations. in outside(a) factors and in of organizations in that domain = complexity Stable-Unstable Dimension refers to whether elements in the environment are dynamic oIf an environmental element remains the said(prenominal) over a period of months/ years = stability FRAMEWORK FOR ASSESSIN G environmental UNCERTAINTY Environmental complexness SimpleComplex Environmental ChangeStableLow Uncertainty Low number of away factors Low change Low-Moderate Uncertainty high-pitched number of external factors Low change UnstableHigh-Moderate Uncertainty Low number of external factors High changeHigh UncertaintyHigh number of external factors High change Adapting to Environmental Uncertainty Positions and De regionments An in complexity and uncertainty in the external environment = in of positions and departments in the firm, which in turn internal complexity Buffering and Boundary Spanning The purpose of buffering roles is to get out uncertainty from the environment. Buffer departments (hr, purchasing, finance, legal) surround the technical core (primary org. function) and exchange resources and information amongst the organization and the external environment. Some firms rid the organization of buffers and break away the technical core to the uncertain environment open ing up the organization and making it more fluid and adaptable. Boundary-spanning roles link and coordinate an organization with primeval elements in the external environment. Primarily concerned with exchange of information to oDetect and put to work in to the organization information about changes in the environment, and oSend information into the environment that presents the organization in a favourable light. Business intelligence and competitory intelligence is unavoidable to analyze large amounts of data and find patterns.Differentiation and desegregation Organizational disparateiation is the differences in cognitive and emotional orientations among managers in different functional departments, and the difference in formal social structure among these departments. When the external environment is complex and unstable, organizational departments become highly specialized to handle the uncertainty in the external sector. High differentiation = difficult to coordinate b etween departments, so integrators become essential additions. Uncertain environments = high level of differentiation and integration organic fertilizer vs. Mechanistic Management Processes Mechanistic Organizational schema stability = Formal structure and control imposed on employees organic Organizational System v stability = v Formal structure and control imposed on employees oRules were loosened, free-flowing, adaptive, and decentralized MechanisticOrganic 1. Tasks are broken great deal in specialized, separate parts 2. Tasks are rigidly defined 3. unappeasable hierarchy of authority, control, and rules 4. Highly centralized at top of organization 5. communicating is vertical1. Employees contribute to common tasks of the dept. 2. Tasks are redefined through employee teamwork 3. Less hierarchy of authority, control, and rules . decentralize 5. Communication is horizontal Planning, Forecasting, and Responsiveness Planning and environmental forecasting becomes necessary in u ncertain environments contributing to the organizations ability to chop-chop respond to sudden changes in the environment. Contingency Framework for Organizational Responses to Uncertainty CONTINGENCY FRAMEWORK FOR ENVIRONMENTAL UNCERTAINTY &038 ORGANIZATIONAL RESPONSES Environmental Complexity SimpleComplex Environmental ChangeStableLow Uncertainty few departments No edge spanning Non integrating roles electric current operations orientation, low-speed responseMechanistic structure formal, centralizedLow-Moderate Uncertainty Many departments Some boundary spanning Few integrating roles Some planning, moderate-speed response Mechanistic structure formal, centralized UnstableHigh-Moderate Uncertainty Few departments Much boundary spanning Few integrating roles Planning orientation, fast response Organic structure teamwork, participative, decentralizedHigh Uncertainty Many departments Extensive boundary spanning Many integrating roles Extensive planning orientation, high-speed res ponse Organic structure teamwork, participative, decentralizedResource Dependence Resource Dependence means that organizations depend on the environment but strive to acquire control over resources to disparage their dependence vulnerability comes from dependence and negative effects on surgery can follow with too much dependence on other organizations. Interorganizational relationships present a trade-off between resources and autonomy Controlling Environmental Resources Responding to the need for resources. Two strategies are adopted to manage resources in the external environment 1. Establish favourable linkages with key elements in the environment 2.Shape the environmental domain Establishing Interorganizational Linkages Ownership companies/ use ownership to establish linkages when they buy a part of or a controlling interest in another(prenominal) company giving the company access to technology, products, or other resources it doesnt currently have access to (ie. acquisitio ns and mergers) Formal Strategic Alliances when there is a high level of complementarity between the business lines, geographical positions, or skills of cardinal companies, the firms often form a strategic alliance (ie. contracts, joint ventures) Cooptation, interlacing Directorates Cooptation occurs when leaders from important sectors in the environment are made part of an organization (ie. board of directors) oInterlocking Directorates is a formal linkage that occurs when a subdivision of the board of directors of one company sits on the board of directors of another company. decision maker Recruitment transferring or exchanging executives to establish favourable linkages Advertising and Public dealings Changing or Controlling the Environmental commonwealth Change of Domain organizations can change the domains it is in, in each of the 10 domains specified (ie. t can choose which market its in, what relationships to hold, suppliers, and locations, etc. ) Political Activit y, Regulation policy-making strategy can be used to erect regulatory barriers against sensitive competitors or to squash unfavourable legislations Trade Associations when work to influence the external environment is accomplished jointly with other organizations that have similar interests asshole Activities when excessive downward pressure leads managers to adopt unfavourable techniques to reach an ends. Organization-Environment collective Framework