Lec 17 Environment.docx

5 Pages
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Department
Management (MGH)
Course Code
MGHB02H3
Professor
Joanna Heathcote

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Description
Lec 17 Environment, strategy, and technology Environmental Uncertainty A condition that exists when the external environment is vague, difficult to diagnose, and unpredictable. What makes an organizational environment uncertain? Uncertainty depends on the environment’s complexity (simple versus complex) and its rate of change (static versus dynamic):  Simple environment  Complex environment  Static environment  Dynamic environment Environmental Uncertainty as a Function of Complexity and Rate of Change Simple/static Low perceived uncertainty Dynamic/complex High perceived uncertainty Static/complex Moderately low perceived uncertainty Dynamic/simple Moderately high perceived uncertainty Increasing uncertainty has several predictable effects on organizations and their decision makers:  Cause-and-effect relationships become less clear.  Stimulates a fair degree of political jockeying within the organization.  More information must be processed by the organization to make adequate decisions. Resource Dependence The dependency of organizations on environmental inputs, such as capital, raw materials, and human resources. Carefully managing and coping with resource dependence is a key to survival and success. Resource dependence can be fairly independent of environmental uncertainty. Organizations must develop strategies for managing both resource dependence and environmental uncertainty. Strategic Responses to Uncertainty and Resource Dependence Organizations devote considerable effort to developing and implementing strategies to cope with environmental uncertainty and resource dependence. Strategy is the process by which top executives seek to cope with the constraints and opportunities that an organization’s environment poses. Much of the impact that the environment has on organizations is indirect rather than direct, filtered through the perceptual system of managers and other organizational members. The perceived environment comprises the basis for strategy formulation. Strategy formulation involves determining the mission, goals, and objectives of the organization. The chosen strategy must correspond to the constraints and opportunities of the environment. The strategy must then be implemented by selecting appropriate managers for the task and employing appropriate techniques. Organizational Structure as a Strategic Response How should organizations be structured to cope with environmental uncertainty? Paul Lawrence and Jay Lorsch studied how organizations should be structured to cope with environmental uncertainty. They studied organizations in three industries that differed in perceived uncertainty:  Plastics (very uncertain)  Packaged food products (somewhat uncertain)  Paper containers (certain) Successful container firms: A relatively certain environment Fairly undifferentiated Mechanistic structure Successful plastics firms: An uncertain environment Highly differentiated Organic structure The Lawrence and Lorsch study demonstrates close connections among environment, structure, and effectiveness. Organizations often tailor structure to strategy in coping with the environment. Other Forms of Strategic Response Structural variations often accompany other responses that are oriented toward coping with environmental uncertainty or resource dependence. Some more elaborate forms of strategic re
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