Organisational Environment

Organisational Environment
Organisational environment
is defined as all elements that exists outside the
boundary of the organisation and have the potential
to affect all or part of the organisation
Domain
Chosen environmental field of action. Domain defines
organisations niche and defines those external
sectors with which the organisation will interact to
accomplish its goal (primarily the product and area)
Cont...
Sector or Subdivision
Environment comprises several sectors or subdivision
that contain similar elements
Ten sectors can be analysed for each organisations:
industry, raw materials, human resources, financial
resources, market, technology, economic condition,
government, sociocultural and internaitonal.
Task Environment
Task environment includes sectors with which
organisation interacts directly and that have a
direct impact on the organisations ability to
achieve its goals
General environment those sectors that might
not have a direct impact but will indirectly
influence it government, socio-cultural,
economic condition, technology and financial
resources sector

Environmental Uncertainty
Simple + Stable =
Low Uncertainty

1. Small number of external elements
and elements are similar
2. Elements remain the same of change
slowly
Examples: soft drink bottlers, beer
distributors, container
manufacturers, food processors

Simple + Unstable =
High-Moderate Uncertainty
1. Small number of external elements
and elements are similar
2. Elements change frequently and
unpredictably
Examples: E-commerce, fashion clothing,
music industry, toy manufacturers
Complex + Unstable =
High Uncertainty
1. Large number of external elements
and elements are dissimilar
2. Elements change frequently and
unpredictably
Examples: Computer firms, aerospace firms,
telecommunications, airlines
Complex + Stable =
Low-Moderate Uncertainty
1. Large number of external elements
and elements are dissimilar
2. Elements remain the same or change
slowly
Examples: Universities, appliance
manufacturers, chemical cos,
insurance cos
STABLE
ENVIRONMENTAL
CHANGE
UNSTABLE
SIMPLE COMPLEX
ENVIRONMENTAL COMPLEXITY
Adapting to change environment
Increasing complexity
Building buffer
Differentiation and Integration

Forms
Mechanistic:
Tasks are broken down into
specialized, separate parts.
Tasks are rigidly defined.
There is a strict hierarchy of
authority and control, and
there are many rules.
Knowledge and control of
tasks are centralized at the
top of the organization.
Communication is vertical.
Organic:
Employees contribute to the
common task of the
department.
Tasks are adjusted and
redefined through teamwork.
There is less hierarchy of
authority and control, and
there are few rules.
Knowledge and control of
tasks are located anywhere in
the organization.
Communication is horizontal.
Environment and Organisational
Response
Low Uncertainty

1. Mechanistic structure; formal,
centralized
1. Few departments

2. No integrating roles

3. Current operations orientation;
low speed response

High-Moderate Uncertainty
1. Organic structure, teamwork;
participative, decentralized
1. Few departments, much boundary
spanning
2. Few integrating roles
3. Planning orientation; fast
response
High Uncertainty
Organic structure, teamwork;
participative, decentralized
1. Many departments differentiated,
extensive boundary spanning
2. Many integrating roles
3. Extensive planning, forecasting;
high speed response
Low-Moderate Uncertainty
1. Mechanistic structure; formal,
centralized
1. Many departments, some boundary
spanning
2. Few integrating roles
3. Some planning; moderate speed
response
STABLE
ENVIRONMENTAL
CHANGE
UNSTABLE
SIMPLE COMPLEX
ENVIRONMENTAL COMPLEXITY
Response to environmental change
Establishing formal relationships
Acquire and ownership stake
Form joint venture and partnerships
Lock in key players
Cooptation
Interlocking directorate
Direct interlock
Indirect interlock
Recruit executives
Influencing key factors
Change where you do business
Get political
Organization-Environment
Integrative Framework
Environmental
domain
(ten sectors)
High
complexity
Establishment of favorable linkages:
ownership, strategic alliances, cooptations,
interlocking directorates, executive recruitment,
advertising, and public relations
Organic structure and systems with low
formalization, decentralization,
and low standardization to enable
a high-speed response
Many departments and boundary roles
Greater differentiation and more
integrators for internal coordination
High
uncertainty
High rate
of change
Scarcity of
valued
resources
Resource
dependence
Control of the environmental domain:
change of domain, political activity,
regulation, trade associations, and
illegitimate activities
Environment Organization