Chap 08 Environment Part 1

8/13/2019 Chap 08 Environment Part 1

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Environment


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Environment defined Environment is defined as everything outside an organizations

boundaries

The general environment encompassescondition that may have animpact on the organization but their relevance is not overtly clear

The specific environment is that part of an enviornment that isdirectly relevant to the organization in achieving its goalsconsistsof critical constituents

Includes customers, suppliers, competitors, govt regulatoryagencies, labour unions etc

Domain refers to the claim that the organization stakes out for itselfwith respect to the range of products or services offered andmarkets served It identifies the organizations niche

Eg Reva Electric Car and Maruti Suzuki


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Actual Vs. Perceived Environment

It the perceptionsnot realitythat lead

to the decisions that managers make

regarding organization design

It is through the perceived environment

that managers respond and make

decisions


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UNCERTAINTY IN THE

ENVIRONMENT

Stable DynamicDEGREE OF CHANGE

DEGREE OF

HOMOGENEITY

Simple

Complex

Small number of

external elements.

Elements remain the

same or change slowly

Small number of

external elements.

Elements are in

continuous change

Large number of

external elements.

Element remain thesame or change slowly

Large number of

external elements.

Elements are incontinuous change.


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UNCERTAINTY IN THE

ENVIRONMENT


DEGREE OF

HOMOGENEITY

Simple

Complex

LEAST

UNCERTAINTY

MODERATE

UNCERTAINTY

MODERATE

UNCERTAINTY

MOST

UNCERTAINTY


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UNCERTAINTY IN THE

ENVIRONMENT


DEGREE OF

HOMOGENEITY

Simple

Complex

Soft drink bottlers,

beer distributors,

container manuf.,

local utilities

Personal computers,

fashion clothing,

music industry, toy

manufacturers

Universities, hospitals,

Insurance companies

American Airlines,

oil companies,

electronic firms,aerospace firms


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MECHANISTIC ORGANIZATION

Mechanistic structures are characterized by high

complexity, formalization and centralization.

They perform routine tasks, rely heavily on programmed

behaviors, and are relatively slow in responding to

the unexpected.


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Environmental uncertainty

Characteristic Mechanistic Organic

Task Definition Rigid Flexible

Communication Vertical Lateral

Formalization High Low

Influence Authority Expertise

Control Centralized Diverse


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EMERY & TRIST

Offered a model that identifies four kinds of environmentsthat organizations might confront:

1. Placid-randomized

2. Placid-clustered

3. Disturbed-reactive

4. Turbulent-field

Placid-randomized is least complex, Turbulent-field is

the most complex.


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PLACID-RANDOMIZED ENVIRONMENTS

This environment is relatively unchanging. Therefore,

environmental uncertainty is low. Environmental

demands are distributed randomly, and change slowly.

Managerial decision making does not give much

attention to the environment.

Employees state insurance corporation


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PLACID-CLUSTERED ENVIRONMENT

Environment changes slowly, but threats are clustered,

not random. The forces in the environment are linked,

and pose a higher threat than randomized changes.

These organizations use long-range planning and

forecasting to learn as much as possible about their

environments. Structures will tend to be centralized.

Public sector units


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TURBULENT-FIELD ENVIRONMENTS

The most dynamic of the environments and has the

highest level of uncertainty associated with it.

Environmental elements are increasingly organized

and interrelated.

Major, dynamic shifts can occur in the environment as

one, or a small group of large companies change the

rules of competition.Here planning is not effective.

Telecommunications


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STRUCTURAL IMPLICATIONS

Emery and Trist did not recommend specific structuralconfigurations associated with each environmental

type.

However, the two placid environments should beresponded to with mechanistic structures, whereas the

disturbed and turbulent environments require more

organic structures.

As the environment becomes more volatile, increasing

flexibility is needed to cope with or manage the

uncertainty that increases.


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DIFFERENTIATION & INTEGRATION

Differentiation and integration was posied as the variables

to examine to determine the state of the internal environment.

Differentiation, closely resembles the traditional definition ofhorizontal differentiation, but in addition to task segmentation,

suggested that managers will

differ in their: (1) time frame, (2) interpersonal orientation,

and (3) goal orientation

Integrationis the quality of collaboration needed to overcome

differentiation and achieve unity of effort among units.


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STRUCTURE VS ENVIRONMENT


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ENVIRONMENT AND ORGANIZATION DESIGN

CHARACTERISTICS

Degree of Degree of Quad- Decentral- Span of Formal- Complexity DesignChange Complexity rant ization Control ization Strategy

Environment Design Characteristics

Simple I Low Few High Low Funct./

Stable Mech.

Complex II Low Many High High Funct./

Mech.

w/T/T.F.

Simple III High Few Low Low Product/

Dynamic Organic

Complex IV High Many Low High Matrix &

Combos


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The Population Ecology View

In general, population ecologists ascribe to anevolutionary view of organizational change

It argues that the environment selects certain types oforganizations to survive and other to perish based on the

structure-environment fit

Assumptions

Focuses on a groups of population of organizations

Defines organizational effectiveness simply as survival Environment is totally determining, managers are

perceived as impotent observers

Carrying capacity of the environment is limited


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Limitations of Population-Ecology View

The theory ignores managerial motivesand abilities

Management can choose the domains or

niches it wants to compete in and,

especially in the long-term, change its

domain

This view has limited application to large

and powerful organizations

This is applicable best to the small and

powerless business organizations


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Implications

More stable the environments, the harder

it is for new organizations to enter and

compete

The truly ineffective organizations are not

studied because they died too soon


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The environment structure relationship

The dynamic environment has more influence

on structure than a static environment Environment and complexity: High

environmental uncertainty tents to lead togreater complexityDifferentiation

Environment and Formalization Stableenvironments should lead to high formalization

Dynamic organizations can also maintain lowformalization of boundary activities while having

high formalization within other functions Environment and Centralization: More complex

the environment, more decentralized it is

Chap 08 Environment Part 1

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