1. Organizational Environment
Organizational environment: set of
forces surrounding an organization
May affect its operation and access to scarce resources
Organizational domain: the range
of goods and services that the organization
produces, and the customers and other
stakeholders whom it serves

2. Demographic / Cultural Forces
The Organizational Environment
International Forces
Demographic / Cultural Forces
Political Forces
Customers
Distributors
Suppliers
Organization
Unions
Government
Competitors
Environmental Forces
Technological Forces
Economic Forces
General Forces
Specific Forces

3. Two Women Boxing Environment Domain
Initially
Now
Domain
What aspects of their environment require adaptation within their organization?

4. Sources of Environmental Uncertainty
complexity, dynamism, and richness
As the environment becomes more
complex, less stable, and poorer, the
level of uncertainty increases.

5. Organization Theory
Contingency theory: to manage its environment effectively, an organization should design its structure to fit its environment.
Fit with environment determines success.

6. Dealing with Uncertainty
When the environment is unstable and uncertain, organizations are more effective if their structures are:
Less formalized
More decentralized
More reliant on mutual adjustment

7. Ideal Relationship Between Environmental Uncertainty and Organizational Structure
Low
Environmental Uncertainty
High
Mechanistic Structure
Low differentiation
Low integration
Centralized decision making
Standardization
Organic Structure
Complex structure
High differentiation
High integration
Decentralized decision making
Mutual adjustment

8. Resource Dependence Theory
The goal of an organization is to:
Minimize its dependence on others for scarce, critical, nonsubstitutable resources
Influence others to provide resources

9. Dilbert on Resource Dependence

10. Interorganizational Strategies
FIGURE 6.6
Interorganizational Strategies
for Managing Symbiotic Interdependencies
Informal
Formal
Reputation
Co-optation
Strategic
alliances
Merger and takeover

11. Third-party linkage mechanisms
FIGURE 6.10
Interorganizational Strategies
for Managing Competitive Interdependencies
Informal
Formal
Collusion and cartels
Third-party linkage mechanisms
Strategic
alliances
Merger
and
takeover

12. Transaction Cost Theory
Transaction costs: the costs of negotiating, monitoring, and governing exchanges between people
Transaction costs are low when:
Exchanges are nonspecific
Uncertainty is low
There are many possible exchange partners

13. Transaction Cost Theory
Organizations adopt increasingly formal linkage mechanisms with their exchange partners as transaction costs increase.
These mechanisms also carry
bureaucratic costs within the organization.

14. A Few Good Men
Describe the environment for American military organizations.
What is their purpose?
List their resource dependencies.