04 - Chapter 4 The External Environment The Environmental...

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Chapter 4: The External Environment The Environmental Domain - Organizational Environment: all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization o Can be understood by analyzing its domain. The domain defines the niche and defines those external sectors the organization will interact with to accomplish its goals Domain: chosen environmental field of action, the territory an organization is in regards to products, services, and markets served o Sectors: what the environment is compiled of - Task Environment (type of sector) o Sectors the organization interacts directly with and have a direct impact on achieving goals, mostly the: Industry (competitors, size) Market (customers, clients, potential users) Raw Materials (suppliers, manufacturers, real estate) Human Resources (labour markets, training, unions) International (foreign customers, regulations, exchange rates) - General Environment (type of sector) o Sectors that might not have a direct impact on daily operations but indirectly influence Government (city, state, laws, taxes, political process) Sociocultural (age, values, beliefs, education, religion, work ethic) Economic (recession, unemployment rate, inflation, economics, growth) Technology (techniques of production, science, computers, IT, e-commerce) Financial (stock markets, banks, savings and loans, private investors) Environmental Uncertainty - Munificence: amount of resources available to support growth - Two ways the environment influences organizations o Need for information about the environment
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Chapter 4: The External Environment o Need for resources from the environment - To assess uncertainty each sector of the task environment can be analyzed with stability and complexity dimensions; total uncertainty = sum uncertainty across environmental sectors o Uncertainty: decision makers do not have sufficient information about environmental factors and have hard time predicting external changes - Simple – Complex Dimensions o Environmental complexity in heterogeneity (number of dissimilarity of external elements relevant to the operations) o More external factors influencing operations and the more companies in the organizations domain, the greater the complexity o Simple environments have little interactions and influenced by few external elements - Stable-Unstable Dimensions o Whether elements in the environment are dynamic o Stable if domain is the same over a long period of time and unstable if it changes o Instability is constantly increasing everywhere with aggressive moves in advertising and new products - Framework – chart goes here Adapting to Environmental Uncertainty - Positions and Departments o As complexity and uncertainty in the external environment increases, so does the number of positions and departments, which then changes the complexity
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04 - Chapter 4 The External Environment The Environmental...

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