External Environment

Chapter 4 The External purlieu The environsal Domain presidency Environment is composed of all elements that exist outside the boundary of the giving medication that give birth the potential to affect all or instigate of the brass section. Its theater is the chosen field of action. The milieu comprises several sphere of influences or subdivisions of the environment that pick up similar elements (ie. industry, raw materials, human resources, market, technology, monetary resources, economic conditions, goernment, sociocultural, and internationalist. Task Environment includes sectors with which the presidency interacts directly and that have a direct impact 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 operation of a firm but will directly influence it. oGovernment, sociocultural, economic conditions, techno logy, and financial resources sectors International Context oDomestic sectors usher out be affected by international events Environmental UncertaintyResponding to the choose for learning. 2 Ways the environment influences organizations (1) the need for information about the environment and (2) the need for resources from the environment. Uncertainty 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 hesitation. Simple Complex Dimension concerns environmental obscureity, the heterogeneity, or the subjugate and dissimilarity of outdoor(a) elements relevant to an organizations operations. in external factors and in of organizations in that field of study = complexity Stable-Unstable Dimension refers to whether elements in the environment are dynamic oIf an environmental element remains the same over a period of months/ years = stability FRAMEWORK FOR ASSESSI NG ENVIRONMENTAL incertitude Environmental Complexity SimpleComplex Environmental ChangeStable broken in Uncertainty Low egress of external factors Low change Low-Moderate Uncertainty High 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 Departments 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 absorb uncertainty from the environment. Buffer departments (hr, purchasing, finance, legal) surround the adept core (primary org. function) and exchange resources and information amid the organization and the external environment. Some firms rid the organization of buffers and expose the technical core to the uncertain environment opening up the or ganization and fashioning it more fluid and adaptable. Boundary-spanning roles link and coordinate an organization with key elements in the external environment. Primarily concerned with exchange of information to oDetect and bring in to the organization information about changes in the environment, and oSend information into the environment that present tenses the organization in a favourable light. Business comprehension and competitive intelligence is necessary to analyze large amounts of data and find patterns.Differentiation and Integration organizational differentiation is the differences in cognitive and emotional orientations among managers in different in operation(p) departments, and the difference in formal social organization among these departments. When the external environment is complex and unstable, organizational departments become noblely specialized to handle the uncertainty in the external sector. High differentiation = difficult to coordinate between de partments, so integrators become essential additions. Uncertain environments = high level of differentiation and consolidation Organic vs. Mechanistic Management Processes Mechanistic organisational System stability = Formal structure and restrict 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 down in specialized, separate parts 2. Tasks are rigidly defined 3. Strict hierarchy of authority, control, and rules 4. Highly centralized at top of organization 5. conference is vertical1. Employees bottom of the inning to common tasks of the dept. 2. Tasks are redefined through employee teamwork 3. Less hierarchy of authority, control, and rules . Decentralized 5. Communication is horizontal Planning, Forecasting, and Responsiveness Planning and environmental forecasting becomes necessary in uncertain environment s contributing to the organizations ability to quickly suffice to sudden changes in the environment. Contingency manikin for Organizational Responses to Uncertainty fortuity FRAMEWORK FOR ENVIRONMENTAL UNCERTAINTY & ORGANIZATIONAL RESPONSES Environmental Complexity SimpleComplex Environmental ChangeStableLow Uncertainty fewer departments No boundary spanning Non incorporate roles Current operations orientation, low-speed reparteeMechanistic 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, high-speed response Organic structure teamwork, participative, decentralizedHigh Uncertainty Many departments Extensive boundary spanning Many integrating roles Extensive planning orientation, high-speed response Organic structure t eamwork, participative, decentralizedResource Dependence Resource Dependence means that organizations depend on the environment but strive to acquire control over resources to minimize their addiction vulnerability comes from dependence and negative effects on performance usher out 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 union giving the company access to technology, products, or other resources it doesnt before long have access to (ie. acquisitions and mergers) Formal Strat egic Alliances when there is a high level of complementarity between the business lines, geographical positions, or skills of two companies, the firms much form a strategic alliance (ie. contracts, joint ventures) Cooptation, Interlocking Directorates Cooptation occurs when leadership from important sectors in the environment are made part of an organization (ie. venire of directors) oInterlocking Directorates is a formal linkage that occurs when a member of the board of directors of one company sits on the board of directors of another company. Executive enlisting transferring or exchanging executives to establish favourable linkages Advertising and Public Relations changing or Controlling the Environmental Domain 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 Activity, Regulation political strategy can be used t o erect regulatory barriers against new 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 Illegitimate Activities when unwarranted downward pressure leads managers to adopt unfavourable techniques to reach an ends. Organization-Environment Integrative Framework