Chapter 6 - Environment

Chapter 6 - Environment - Organizational Environments 1...

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Organizational Environments 1. Defining organizational environments 2. Organization – environment interaction
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1. Defining organizational environments G l i t a) General environment – Industry sector l t l – Cultural – Legal & political conomic – Economic – Technology abour market – Labour market – Physical resources c etc. ..
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) T k it ( i f i ) b) Task environment (specific environment) – Particular elements of the environment (e.g., sectors, players within sectors, etc.) that directly influence/interact with the ,) y organization – “Organizational set” • Set of other organizations in an organization’s task environment – Organizations exist in complex networks of other organizations • Cooperative & competitive interactions • Symbolic & substantive interactions • Examples int ventures alliances licensing arrangements – Joint ventures, alliances, licensing arrangements – Supply chain – Japanese “keiretsu” (family of organizations)
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c) Environmental uncertainty omplexity – Complexity • Number of elements affecting organization hange (stability) – Change (stability) • Magnitude and rate of change in the elements of the environment – Munificence (richness) • Abundance of required resources
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Complexity hange imple omplex Change Simple Complex Stable tt i) Low uncertainty ft d i k Low-Moderate tit (static) -soft drinks uncertainty -automotive, insurance Unstable (dynamic) Moderate-High uncertainty High uncertainty -computer -fast food, fashion software, electronics
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2. Organization - environment interaction a) Environmental uncertainty & organization design – Mechanistic vs. Organic structures •Burns & Stalker studies u s & Sta e stud es – Differentiation & Integration awrence & Lorsch studies • Lawrence & Lorsch studies – Beginning of “contingency theory”
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Burns & Stalker study Manufacturing firms Research & Development (R&D) firms Characteristics of the Environment -Simple -More Stable -i.e., Low Uncertainty -Complex -More dynamic -i.e., High Uncertainty Organization Structure (including control approach & coordination) “Mechanistic” structure “Organic” structure -well defined, formalized procedures -more rules, procedures -more centralized decision making - ainly vertical communication -much less defined, less formalized procedures -few formal rules (or rules are often nored) mainly vertical communication -clear hierarchy of authority -“Bureaucratic” Main coordination mechanisms: ignored) -decentralized decision making -mainly horizontal communication -no clear hierarchy of authority -Standardization -Direct supervision -“Adhocracy” Main coordination mechanisms: -mutual adjustment
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Lawrence & Lorsch Studies Mfg, R&D & Sales functions in 3 industries: Plastics, Industrial Foods, Containers Study 1 – Differences between functions R&D Manufacturing Sales ub- vironment - cientific - uppliers - arket Sub environment Scientific community Suppliers -Labour market Market -Customers -Competitors Organizational variables Formalization -Low -High -High Planning time horizon -Long -Short -Short Primary goals -New
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This note was uploaded on 04/18/2008 for the course MANAGEMENT MSCI 311 taught by Professor Dumiering during the Spring '08 term at Waterloo.

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Chapter 6 - Environment - Organizational Environments 1...

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