Strategy Organization Design n Effectiveness

Ch No 4OTDBy By Kaleem A. BarlasThe External Environment

Learning Objectives The Environmental DomainTask environment, general Environment International contextEnvironmental UncertaintySimple, complex dimension, stable un-stable dimension, frameworkAdapting to environmental uncertainty positions and departments, boundary spanning, integration, planning, forecasting and responsiveness Framework for organizational responses to uncertainty Resource dependence, controlling resources, interrogational linkages, controlling the environmental domain, integrative frame work

The Environmental Domain Environment include every thing out side the organization, its the elements outside the boundary of the orgs. But has the potential to affect all or the parts of the org. Ten sectors can affectIndustry Raw materialHuman resourceFinancial resourcesMarket TechnologyEconomic conditionsGovernment Socio-cultural n international

Task Environment Task environment includes sectors with which the orgs. Interacts directly for achievement of goals. Industrial sectorCompetitorsSuppliersLabor marketStock marketCustomersMIS e-com. ICTRecession Demographics City state , IM

General Environment The general environment includes those sectors which may not have direct impact but will indirectly influence the ops.Government Sector Shifting demographics General economic conditionsTechnology sectorFinancial sector/resources

International ContextThe international sector can directly affect many organizations. Many students fail to realize the importance of international events and still think domestically. The distinction between the foreign n domestic operations have become irrelevant, for example Auto industry.The growing importance of international sector means the environment for all orgs. Is becoming extremely complex n competitiveOrgs. Need to learn change management to face domestic and global uncertainty.

Environmental uncertainty environment can be described along several dimensions, such as Stable Unstable Homogeneous HeterogeneousSimple Complex Resource availabilityGrowth

ContinuedUncertainty means Decision makers do not have sufficient informationDifficult to predict external changes Leads to the risk of failure to respond Need to analyze task environment

Simple- complex Dimension The simple-complex dimension relates to dissimilarity of external elements relevant to orgs. Ops. Complex means to deal with diverse external elements, simple means where orgs has to interact with similar external elements

Boeing co. is interacting with complex environment as against a family owned hardware store faces simple environment

Stable-unstable Dimension The stable dimension means the environment remains the same over a period f time. The unstable dimension means environment is dynamic and is likely to change frequently. The environmental domain seems to be increasingly unstable due to technological changes taking place faster than expectedInstability also occurs when competitors react with aggressive moves n counter moves regarding advertising for new products.

Adapting to Environmental Uncertainty Can be achieved through internal structure n external environment Positions n departmentsAs the complexity n uncertainty in the external environment increases, so does the number of positions n depts. With in the co. which in turn increases internal complexity. This relationship is part of being open system. Each sector in the external environment requires an employee or dept. to deal with it.The orgs. Need to respond positively if they want to survive.

Buffering n boundary spanning The traditional approach to coping with uncertainty was to establish buffer depts. Buffer depts. Surround the technical core n exchange material ,resources and money between the environment n the organization, like purchasing dept. buffers technical dept by stock piling supplies and raw material.They play enabling role to increase the productivity n efficiency f the core depts. Boundary spanning rolesLink n coordinate an orgs. With key elements in the environment. Boundary spanning is concerned with exchange of info.;

Continued Bring info. Into the orgs. About changes in the environment Send info into the environment that that build image Provide business intelligenceAdvertizing n sales promotionPublic relationing purchaser may call on suppliers and describe purchasing needsThe legal dept. informs lobbyists n elected officials orgs. Needs or political views

Differentiation n Integration Differentiation Means an autonomous depart to deal with external affairs like in R&D dept. employees have unique attitudes, values, goals, n education that distinguishes them from employees in manufacturing dept. or sales dept.Integration Is the quality of collaboration among depts. Integrators or liaison officers are appointed for coordination and information sharing. Like setting up a data base for use of the entire org.

Organic vs Mechanistic Management Process Mechanistic Means formalized structure, also centralized, following rules, procedures and clear hierarchy of authority, with most decision making at top.Organic The learning orgs. With horizontal n vertical network structure are organic orgs. Suited to fast changing environment. In these orgs. Decision making is down loaded with authority and responsibility.

Planning, Forecasting, n Responsiveness To enhance orgs. Ability to response to sudden changes in uncertain environment it looks when every thing changing so rapidly then why planPlanning and forecasting becomes more important under such circumstances to be ready to responseUnder stable environment the org can focus on operationsPlanning can soften the effect of adverse impactPlanning can not substitute action

Frame work for orgs. Response to uncertaintyLow uncertainty Few departments No integrating rolesCurrent ops orientationHigh uncertainty Organic structure Many departmentsMany integrating rolesExpensive planningLow Moderate uncertainty Mechanistic structure Formal orgs.Centralized High Moderate uncertaintyOrganic ,Team workParticipative

Resource dependence Trade off between resources n autonomy Orgs. Are dependent on others for various resources.News papers are dependent on advertisers so they always keep soft corner for news papers,Big cos. Like IBM n Motorola dictate terms to vendors to lower their costsControlling environmental resources Balance between linkages n independence Try to modify, manipulate n controlee other orgs.Establish favorable linkagesShape the environmental domain

Establishing inter-organizational linkages Ownership Contracts Joint venturesExecutive exchangesAdvertising public relationsControlling the domain Change of domain Political activity (lobbying for favorable laws) Trade association Illegitimate activities Orgs.- Environmental integrative frame-work Deals with two themes Amount of complexity n change in orgs. Domain Scarcity of material and financial resources

Quiz

What is resource dependency? Explain briefly