Course Hero Logo

Uncertainty for managers uncertainty makes it hard to

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 184 - 190 out of 237 pages.

uncertainty for managers. Uncertainty makes it hard to know what to do in order todesign and manage an effective organization. But as managers understand the sourcesof uncertainty in the external environment, they can design organizations that are betterequipped to deal with that uncertainty and ultimately be more effective.
Designing the OrganizationProfessorMicheal10Environmental uncertainty is increased as the environment becomes more complex andmore unstable. So let's discuss these two aspects of uncertainty,complexity and stability.
Designing the OrganizationProfessorMicheal11When we talk about complexity, we're really just talking about how many of theelements of the task and general environment does the firm really have to deal with? Sofor example, if you're a big auto manufacturer that deals with hundreds of differentsuppliers, your environment is more complex than a similar firm that deals with relativelyfew suppliers, or let's say that you are a company that sells lots of different products indifferent regions to very different sets of customers. Again, your external environment ismore complex when compared with the firm that has a limited product offering and amore limited customer base.
Designing the OrganizationProfessorMicheal12When we talk about stability, we are interested in how quickly the various parts of theexternal environment are changing. For example, we can think of how quickly arerelevant technologies changing or are there changes in customer preferences? Theremight be an abrupt change with the key stakeholders, such as a supplier that goes outof business or an employee strike. All of these things would make the environment moreunstable and would increase environmental uncertainty.So to summarize, as the environment becomes more complex because we have toaccount for more factors outside the organization, and as those factors become more
Designing the OrganizationProfessorMicheal13unstable, then uncertainty increases. Now, uncertainty has implications for how wedesign the organization. If the external environment is simple and stable, then youdesign your organization differently than if your organization is in a complex andunstable environment. So how can we design organizations that can deal withenvironmental uncertainty? Well, first of all, if the environment becomes more complexand we have to deal with a greater number of elements in the external environment,we can create specialized departments. So for example, as a company grows andincreasingly has to deal with regulatory changes and other legal issues, they mightcreate a separate legal department that can specialize in dealing with that part of theexternal environment.
Designing the OrganizationProfessorMicheal14Now, as we increase the number of specialized departments that can create a new setof problems related to coordination, and we have to make sure that specializeddepartments are still working towards organizational goals in addition to departmental

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 237 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Summer
Professor
Staff
Tags
Management, Professor Geoffrey Love, Mike Bednar

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture