External Environment in organization structure
-
Upload
ridha-ansari -
Category
Documents
-
view
392 -
download
3
description
Transcript of External Environment in organization structure
4-1Thomson Learning© 2004
Chapter Four
The External Environment
Thomson Learning© 2004 4-2
(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, unionization(d) Stock markets, banks, savings and loans, private investors(e) Customers, clients, potential users of products and services(f) Techniques of production, science, computers, information technology
(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 greenmovements
(j) Competition fromand acquisition by
foreign firms,entry into overseas
markets, foreign customs, regulations,
exchange rates
An Organization’s Environment
(j)International
Sector
(d)Financial
ResourcesSector
(e)MarketSector
(f)Technolo
gySector
(g)EconomicConditions
Sector
(a)IndustrySector
(h)Government
Sector
(c)Human Resourc
esSector
(b)Raw
MaterialsSector
(i)Sociocultur
alSector
ORGANIZATION
DOMAIN
Thomson Learning© 2004 4-3
(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, unionization
(e) Customers, clients, potential users of products and services
(j) Competition fromand acquisition by
foreign firms,entry into overseas
markets, foreign customs, regulations,
exchange rates
Task Environment
(j)International
Sector
(e)MarketSector
(a)IndustrySector
(c)Human Resourc
esSector
(b)Raw
MaterialsSector
ORGANIZATION
DOMAIN
Thomson Learning© 2004 4-4
(d) Stock markets, banks, savings and loans, private investors
(f) Techniques of production, science, computers, information technology
(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 greenmovements
General Environment
(d)Financial
ResourcesSector
(f)Technolo
gySector
(g)EconomicConditions
Sector
(h)Government
Sector
(i)Sociocultur
alSector
ORGANIZATION
DOMAIN
Thomson Learning© 2004 4-5
(j) Competition fromand acquisition by
foreign firms,entry into overseas
markets, foreign customs, regulations,
exchange rates
International Environment
(j)International
Sector
ORGANIZATION
DOMAIN
Framework for Assessing Environmental Uncertainty
Thomson Learning© 2004
4-6
Simple + Stable = Low Uncertainty
1. Small number of external elements, and elements are similar
2. Elements remain the same or change slowly
Example: soft drink bottlers, beer distributors, container manufacturers food processors
Complex + Stable = Low-moderate Uncertainty
1. Large number of external elements, and elements are dissimilar
2. Elements remain the same or change slowly
Example: Universities, appliance manufacturers, chemical companies, insurance companies
Simple + Unstable = High-Moderate Uncertainty
1. Small number of external elements, and elements are similar
2. Elements change frequently and unpredictably
Example: E-commerce, fashion clothing, music industry, toy manufacturers
Complex + Unstable = High Uncertainty
1. Large number of external elements, and elements are dissimilar
2. Elements change frequently and unpredictably
Example: computer firms, aerospace firms, telecommunications firms, airlines
Uncertainty
Stable
Unstable
Simple Complex
ENVIRONMENTALCHANGE
ENVIRONMENTAL COMPLEXITY
ADAPTING TO A CHANGING ENVIRONMENT
Thomson Learning© 2004 4-7
Adding Positions and Departments
Building Relationships
Differentiation and Integration
Thomson Learning© 2004 4-8
MarketSub-environment
Customers AdvertisingCompetitors agencies
Distributionsystem
ManufacturingSub-environment
Labor Raw Suppliersmaterials
Productionequipment
ScientificSub-environment
Scientific Researchjournals centers
Professionalassociations
Organizational Departments Differentiate to Meet Needs of
Sub-environments
President
R & DDivision
SalesDivision
ManufacturingDivision
Thomson Learning© 2004 4-9
Differences in Goals and Orientations Among
Organizational Departments
Characteristic
R & DDepartment
Manufacturing
Department
SalesDepartment
GoalsNew developments, quality
Efficient production
Customer satisfaction
TimeHorizon Long Short Short
InterpersonalOrientation Mostly task Task Social
Formality ofStructure Low High HighSource: Based on Paul R. Lawrence and Jay W. Lorsch,Organization and Environment (Homewood, Ill.: Irwin, 1969), pp. 23-29.
Thomson Learning© 2004 4-10
Environmental Uncertainty and Organizational
Integrators
Industry: Plastics Foods Container
Environmental
UncertaintyHigh Moderate Low
Departmental
Differentiation
High Moderate Low
Percent of management in integrating
roles
22% 17% 0%Source: Based on Jay W. Lorsch and Paul R. Lawrence,“Environmental Factors and Organizational Integration,”Organization Planning: Cases and Concepts (Homewood, Ill.:Irwin and Dorsey, 1972), 45.
Thomson Learning© 2004 4-11
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.
Source: Adapted from Gerald Zaltman, Robert Duncan, and Jonny Holbek,Innovations and Organizations (New York: Wiley, 1973), 131.
Thomson Learning© 2004 4-12
Low Uncertainty
1. Mechanistic structure; formal, centralized2. Few departments
3. No integrating roles
4. Current operations orientation; low speed response
High-Moderate Uncertainty
1. Organic structure, teamwork; participative, decentralized2. Few departments, much boundary spanning3. Few integrating roles4. Planning orientation; fastresponse
High Uncertainty
1. Organic structure, teamwork; participative, decentralized2. Many departments differentiated, extensive boundary spanning3. Many integrating roles
4. Extensive planning, forecasting; high speed response
Low-Moderate Uncertainty
1. Mechanistic structure; formal, centralized2. Many departments, some boundary spanning3. Few integrating roles4. Some planning; moderate speed response
Contingency Framework for Environmental Uncertainty and
Organizational Responses
Uncertainty
Uncertainty
ENVIRONMENTALCHANGE
STABLE
ENVIRONMENTAL COMPLEXITY
UNSTABLE
SIMPLE COMPLEX
Thomson Learning© 2004 4-13
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
Thomson Learning© 2004 4-14
Relationship Between Environmental Characteristics and
Organizational Actions
Environmentaldomain
(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 to enable a high-speed response
Many departments and boundary rolesGreater differentiation and more
integrators for internal coordinationHighuncertainty
High rateof change
Scarcity ofvalued
resources
Resourcedependence Control of the environmental domain:
change of domain, political activity,regulation, trade associations, and
illegitimate activities
Environment Organization