Lec 17 Environment, strategy, and technology
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):
Environmental Uncertainty as a Function of Complexity and Rate of Change
Low perceived uncertainty
High perceived uncertainty
Moderately low perceived uncertainty
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.
The dependency of organizations on environmental inputs, such as capital, raw materials, and human
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
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
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
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
Successful plastics firms:
An uncertain environment
The Lawrence and Lorsch study demonstrates close connections among environment, structure, and
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