The External Environment 11

The External Environment Basics Organizational environment is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of organization An organization’s Domain is the chosen environmental field of action (niche)

The External Environment Sectors Environment comprises of various sectors: Industry Raw material HR sector Financial resource sector Market sector Technology sector Economic conditions sector Government sector Sociocultural sector International sector

Environmental Uncertainty Simple/complex dimension Stable/unstable dimension

Adapting to Environmental Uncertainty Refer to open systems theory Each sector in the external environment requires an employee or department to deal with it Buffering departments Boundary spanners Departmental Differentiation & Integration

Adapting to Environmental Uncertainty Organic and Mechanistic Design: Stalker’s study: “When the external environment was stable, the internal organization was characterized by rules, procedures, and a clear hierarchy of authority….in a rapidly changing environment the internal organization was much loose, free-flowing, and adaptive.”

Adapting to Environmental Uncertainty Mechanistic Form Tasks are broken down into specialized separate parts Tasks are rigidly defined Strict hierarchy of authority and control, many rules Knowledge and control of tasks are centralized at the top of the organization Communication is vertical

Adapting to Environmental Uncertainty Organic Form Employees contribute to the common tasks of the department Tasks are adjusted and redefined through teamwork There’s less hierarchy of authority and control, a few rules Knowledge and control of tasks are located anywhere in the organization Communication is horizontal