Presentation on theme: "Organizational Environment"— Presentation transcript:
1 Organizational Environment Organizational environment: set offorces surrounding an organizationMay affect its operation and access to scarce resourcesOrganizational domain: the rangeof goods and services that the organizationproduces, and the customers and otherstakeholders whom it serves
2 Demographic / Cultural Forces The Organizational EnvironmentInternational ForcesDemographic / Cultural ForcesPolitical ForcesCustomersDistributorsSuppliersOrganizationUnionsGovernmentCompetitorsEnvironmental ForcesTechnological ForcesEconomic ForcesGeneral ForcesSpecific Forces
3 Two Women Boxing Environment Domain InitiallyNowDomainWhat aspects of their environment require adaptation within their organization?
4 Sources of Environmental Uncertainty complexity, dynamism, and richnessAs the environment becomes morecomplex, less stable, and poorer, thelevel of uncertainty increases.
5 Organization TheoryContingency 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 formalizedMore decentralizedMore reliant on mutual adjustment
12 Transaction Cost Theory Transaction costs: the costs of negotiating, monitoring, and governing exchanges between peopleTransaction costs are low when:Exchanges are nonspecificUncertainty is lowThere 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 carrybureaucratic costs within the organization.
14 A Few Good MenDescribe the environment for American military organizations.What is their purpose?List their resource dependencies.
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