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Chapter 4

OB II Chapter 4.docx

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Steve Risavy

Chapter 4: The External Environment The Environmental Domain - Organizational environment: all elements that exist outside the boundary of the organization that have the potential to affect all or part of the organization - Domain: chose field of action o Organizations niche and external sections that organization will interact to accomplish goals Task Environment - sectors that organization interacts directly and have direct impact on organizations ability to achieve goals o ex. Industry, raw materials, market sectors, human resources and international sectors General Environment - sectors that might not have direct impact on daily operations of firm but will indirectly influence it o ex. Government, socio-cultural, economic conditions, technology and financial resource sectors Environmental Uncertainty - essential ways the environment influences organizations 1) need for information about environment 2) need for resources from environment - Simple Complex Dimension o Number and dissimilarity of external elements relevant to an organization’s operations - Stable- Unstable Dimension o How dynamic elements in environment are  Unstable: abrupt and unexpected o Instability when competitors react with aggressive moves and counter moves regarding advertising and new products Stable Simple Complex Low Uncertainty Low-Moderate Uncertainty - small number of external - large number of external elements and elements are elements and elements are similar dissimilar - elements remain the same - elements remain the same or or change slowly change slowly Ex. Soft drinks, beer distributors, Ex. Universities, appliance manu, food processors insurance companies Unstable High Moderate Uncertainty High Uncertainty - Small number of external - large number of external elements and elements are elements and elements are similar dissimilar - Elements change - elements change frequently frequently and and unpredictably unpredictably Ex. Computer firms. Aerospace Ex. E-commerce, fashion firms, telecommunications, clothing, toy manufacturer airlines - as complexity and uncertainty in external environment increases, so does the number of positions and departments within the organization (internal complexity) Buffering and Boundary Spanning - Buffering Roles: absorb uncertainty from the environment o Ex. Purchasing department buffers the technical core by stockpiling supplies and raw materials - Boundary Spanning: link and coordinate with key elements in the external environment 1) Detect and bring into the organization information about changes to environment 2) Send information into the environment that presents the organization in a favourable light Differentiation and Integration - Differentiation: differences in cognitive and emotional orientations among mangers in different functional departments and the difference in formal structure among these departments - Integration: quality of collaboration among departments Organic Vs Mechanistic Management Process - Mechanistic: when external environment is stable, rules, procedures, clear hierarchy and centralized decision making - Organic: in rapidly changing environment, internal organization is much looser, free flowing and adaptive with decentralized decision making Mechanistic Organic 1. Tasks are
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