Organization's Environment
Organizational Environment
1. Dynamism: whether events in environment are stable or unstable
2. Complexity: whether environment is simple or complex
3. Abundance: amount of financial resources available
The three dimensions
-use structural mechanisms that encourage horizontal communication and collaboration to help company adapt to changes in environment
-must have right fit between internal structure and external environment
Adapting to Complexity and Dynamism
Cross-functional group of managers and employees, led by CI professional who gain deep understanding of specific business issue to present insights, possibilities, and recommendations to top leaders.
Intelligence
-maintain balance between depending on other organizations and preserving their own independence
-attempt to modify, manipulate, or control elements of the external environment to meet their needs
-Establish formal relationships:
1. acquire ownership stake
2. form joint ventures
3. lock in key players
Influencing Financial Resources
The chosen environmental field of action; the territory the organization stakes out for itself with respect to products, services, and markets served
Domain
1. The need for information about changes in the environment
2. the need for resources from the environment
The two ways environment is influenced
absorb uncertainty from the environment
-help technical core function efficiently
-technical core performs the primary production activity of an organization; buffer departments surround the technical core and exchange material, resources, and money between environment and the organization
-recent approach: drop the buffers and expose the technical core to the uncertain environment
-being well connected to suppliers and customers is more important than internal efficiency
Buffering Roles
Refers to differences in cognitive and emotional orientations among managers in different functional departments
-when external environment is complex and rapidly changing, org departments must be highly specialized
When leaders from important sectors in environment are made part of an organization
Cooptation
Sectors
Decision makers do not have sufficient information about environmental factors and have a difficult time predicting external changes; increases risk of failure, difficult to compute costs of alternatives
Uncertainty
Link and coordinate an organization with key elements in the external environment; primarily concerned with exchange of information to detect and bring into the org information about changes in the environment and to send info into the environment that presents the org in a favorable light
-prevent organization from stagnating by keeping top managers informed about environmental changes
Boundary-Spanning Roles
Quality of collaboration among departments; liaison personnel, brand managers, or coordinators; not common in very simple, stable environments, more common in unstable/uncertain environments
Integration
Formal linkage that occurs when a member of the board of directors of one company sits on the board of another
Interlocking Directorate
Includes sectors with which the organization interacts directly and have a direct impact on the organization's ability to achieve its goals
Task Environment
Heterogeneity or the number and dissimilarity of external elements (competitors, suppliers, industry changes, gov’t regulations) that affect organization’s operations.
Complexity
Form of boundary spanning; high-tech analysis of large amounts of internal and external data to spot patterns and relationships that might be significant
Business Intelligence
In rapidly changing environments, internal organization was much looser, free-flowing, and adaptive, with loose hierarchy and decentralized decision making
Organic Organization System
When one individual is the link between two companies
VS.
When director of company A and director of company B are both directors of company C.; no direct influence over their respective companies but can access to one another
Direct and Indirect Interlock
Sectors that might not have a direct impact on the daily operations of a firm but will indirectly influence it
General Environment
Whether the environment in which the organization operates in is stable or unstable; remains the same over a period of months or years;
-environmental domains are increasingly unstable
Dynamism
Give managers systematic approach to collecting info about competitors;
Competitive Intelligence
Means that organizations depend on the environment but strive to acquire control over resources to minimize their dependence; vulnerable if financial resources are controlled by other organizations which will have negative effects on performance
Resource Dependence
1. change where you do business-your domain
2. use political activity, regulation- squash unfavorable regulation, work to appoint people who are sympathetic to their needs
3. join in trade associations-orgs with similar interests, can pay for lobbying, new regulations, new pr,
4. Avoid illegitimate activities
Influence Key Sectors