BUS 2090 Chapter Notes - Chapter 15: Fax, Word Processor, Mergers And Acquisitions

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Published on 7 Apr 2013
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Chapter 15 Individuals, Groups & Organizations
Environment, Strategy & Technology
The External Environment of Organizations
External Environment: Events & conditions surrounding an organization that influences is activities
Organizations as open systems
Organizations can be called open systems which are systems that take inputs from the external
environment, transform some of these inputs and send them back into the external environment as outputs
Inputs include capital, energy, materials, information
Outputs include various products & services
Transformation process may be physical, intellectual or even emotional
Components of the External Environment
Interest Groups: Parties or orgs other than direct competitors that have some vested interest in how an org. is
managed
The General Economy
Organizations that sell product or services often suffer economic downturn and profit from upturn
When downturn happens, competition of remaining customers increases and org’s might postpone needed
capital improvements
Some org’s might thrive under a poor economy (e.g. welfare office)
If a poor economy is coupled with high unemployment due to layoffs some orgs. Might find this prime for
upgrading their staff since there are a lot of options
Customers
All organizations have potential customers for their products & services
Orgs must be sensitive to changes in customer demands
Suppliers
Orgs are dependent on the environment for suppliers which include labour, raw materials, equipment, and
component parts
Shortages can cause severe difficulties
More exclusive relationships w/ suppliers on the basis of quality and reliable delivery are becoming more
common
Competitors
Environmental competitors vie for resources that include both customers and suppliers
Must monitor competitor activities
For many organizations, competition has become so aggressive that their environments are called
hypercompetitive and they must be really flexible and respond quickly to changes in order to cope
Social/Political
Public attitudes towards ethnic diversity, proper age for retirement, the environment, CSR or proper role of
big business will affect companies
These attitudes find expression in law and through the political process
Orgs must cope w/ a series of legal regulations that prescribe fair employment practices, proper
competitive activities, product safety, clients’ rights and environmental protectionism
Technology
The ability to adopt the proper technology should enhance org. effectiveness
Environmental Uncertainty
A condition that exists when an external environment is vague, difficult to diagnose and unpredictable
Customer may come and go, suppliers may turn bad all of a sudden etc.
Some environments are less certain than others
Uncertainty depends on an environment’s complexity and its rate of change
Simple Environment
Involves relatively few factors and they are similar to eachother
Complex Environment
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Contains a large number of dissimilar factors that affect and org
Static Environment
Components of this environment remain fairly stable over time
No environment is completely static
Dynamic Environment
Components are in constant stage of change, which is unpredictable & irregular, not cyclical
Increasing uncertainty makes cause-and-effect relations less clear, tends to make priorities harder to agree
on and often stimulates a fair degree of political jockeying and also more info must be processed by the
org. to make good decisions
Environmental scanning, boundary spanning, planning and formal management info systems will become
more prominent
Resource Dependence
Resource Dependence: The dependency of organizations on environmental inputs such as capita, raw materials
and HR
Carefully managing & coping w/ this resource dependency is a key to survival & success
Although all orgs. Are dependent on their environments for resources, some orgs. Are more dependent than
others b/c some environments have a larger amount of readily available resources
Competitors, regulatory agencies and various interest groups can have a considerable stake in how an org.
obtains & transforms its resources
The concept of resource dependency doesn't means that orgs are totally at the mercy of their environments
but means they must have strategies for both managing resource dependence & environment uncertainty
Strategic Responses to Uncertainty & Resource Dependence
A strategy is the process y which top execs seek to cope w/ the constraints and opportunities presented by
an org’s environment
Much of the impact that environment has on orgs is indirect rather than direct, filtered through the
perceptual system of managers and other org. members
By means of the perceptual process personality and experience may colour managers perceptions of
the environment
Strategy formation involves determining the mission, goals & objectives of the org.
The organization’s orientation towards the perceived environment must be determined
Strategy must correspond to the constraints & opportunities lf the environment
Organizational Structure as a Strategic Response
Lawrence and Lorsch study for 3 industries plastics, packaged foods and paper containers
Also examined the sectors of the environment that were faced by 3 departments in each company: sales,
production and research
Found that relatively certain environment and fairly undifferentiated org adopts more mechanic structure
Strict functional lines and highly centralized
Coordination achieved through direct supervision and written schedules
Other orgs w/ uncertain environment & high differentiation adopted organic structure
Decision making decentralized to locate it where appropriate knowledge existed
Coordination achieved through informal mutual adjustment, ad hoc teams that cut across
departments etc.
This study demonstrates close connections between environment, structure & effectiveness
Follow-up research doesn't totally support their findings
Other Forms of Strategic Response
Structural variations often accompany other responses that are oriented toward coping w/ environmental
uncertainty or resource dependence
Some forms of strategy implementation appear extremely routine but other are very formal
Lobbying & PR are common strategic responses and so are simple negotiating and contracting
Vertical Integration
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Document Summary

External environment: events & conditions surrounding an organization that influences is activities. Organizations can be called open systems which are systems that take inputs from the external environment, transform some of these inputs and send them back into the external environment as outputs. Transformation process may be physical, intellectual or even emotional. Interest groups: parties or orgs other than direct competitors that have some vested interest in how an org. is managed. Organizations that sell product or services often suffer economic downturn and profit from upturn. When downturn happens, competition of remaining customers increases and org"s might postpone needed capital improvements. Some org"s might thrive under a poor economy (e. g. welfare office) If a poor economy is coupled with high unemployment due to layoffs some orgs. Might find this prime for upgrading their staff since there are a lot of options. All organizations have potential customers for their products & services. Orgs must be sensitive to changes in customer demands.

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