Chap 08 Environment Part 1
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Transcript of 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
Stable DynamicDEGREE OF CHANGE
DEGREE OF
HOMOGENEITY
Simple
Complex
LEAST
UNCERTAINTY
MODERATE
UNCERTAINTY
MODERATE
UNCERTAINTY
MOST
UNCERTAINTY
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UNCERTAINTY IN THE
ENVIRONMENT
Stable DynamicDEGREE OF CHANGE
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