An Organizations Environment

1
An Organizations Environment

• (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,

(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 by foreign firms, entry into
overseas markets, foreign customs,
regulations, exchange rates
International Context
(j) International Sector
(a) Industry Sector
DOMAIN
(b) Raw Materials Sector
(i) Socio-cultural Sector
(h) Government Sector
(c) Human Resources Sector
ORGANIZATION
(d) Financial Resources Sector
(g) Economic Conditions Sector
(e) Market Sector
(f) Technology Sector
2
Organizational Departments Differentiate to Meet
Needs ofSub-environments
President
R D Division
Sales Division
Manufacturing Division
3
Differences in Goals and Orientations Among
Organizational Departments
4
Environmental Uncertainty and Organizational
Integrators
5
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
  the top of the organization.
• Communication is vertical.

• Employees contribute to the common task of the
  department.
• Tasks are adjusted and redefined through
  teamwork.
• There is less hierarchy of authority and control,
  and there are few rules.
• Knowledge and control of tasks are located
  anywhere in the organization.
• Communication is horizontal.

6
Contingency Framework for Environmental
Uncertainty and Organizational Responses
STABLE
ENVIRONMENTAL CHANGE
Uncertainty
UNSTABLE
COMPLEX
ENVIRONMENTAL COMPLEXITY
7
Organization Strategies for Controlling the
External Environment

• Establishing Interorganizational Linkages
• 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

8
Relationship Between Environmental
Characteristics and Organizational Actions
Environment
Organization
Many departments and boundary roles Greater
differentiation and more integrators for
internal coordination
High complexity
High uncertainty
Organic structure and systems with low
formalization, decentralization, and low
standardization
High rate of change
Environmental domain (ten sectors)
Establishment of favorable linkages ownership,
strategic alliances, cooptations, interlocking
directorates, executive recruitment,
advertising, and public relations
Resource dependence
Scarcity of valued resources
Control of the environmental domain change of
domain, political activity, regulation, trade
associations, and illegitimate activities