Copyright © 2002 by South-Western 4–1 Chapter 4 Environmental InfluencesEnvironmental Influences  External  Internal Closed systems, Open SystemsClosed systems, Open Systems Mechanistic, Organic SystemsMechanistic, Organic Systems

Copyright © 2002 by South-Western 4–2 Organizational Environments External environmentExternal environment  The environment that is outside the formal boundaries of the organization; having a set of conditions, circumstances, and influences that surround and affect the functioning of an organization.  Effective organizations develop management systems that integrate management practices and organizational design with the characteristics of their external environment.

Copyright © 2002 by South-Western 4–3 Organizational Environments (cont’d) External environment partitions (cont’d)External environment partitions (cont’d)  The general environment—the broader milieu (environment, political setting, surroundings) in which an organization operates along with many other organizations.  The task environment—the more specific and immediate (localized) environment in which the organization conducts its business.

Copyright © 2002 by South-Western 4–4 Relationship between the Task and General Environments and the Organization General Environment Sociocultural Economic Technological Legal/Political International Task Environment Suppliers Customers/markets Regulatory and influence groups Competitors Allies Manager and Organization FIGURE 4–1

Copyright © 2002 by South-Western 4–5 Organizational Environments (cont’d) Internal environmentInternal environment  All that is the organization—such as its space, climate, machines/equipment, work and work processes, management and management processes, and organizational members.

Copyright © 2002 by South-Western 4–6 The Organization-Environment Relationship Problems of environmental uncertaintyProblems of environmental uncertainty  Managers can neither control nor predict everything that will happen in the organization’s interaction with the external environment. Problems of interdependenceProblems of interdependence  Organizations develop exchange relationships with other organizations that create interdependencies between the partners.

Copyright © 2002 by South-Western 4–7 Managing Uncertainty and Interdependence Strategies for dealing with uncertainty and interdependence:Strategies for dealing with uncertainty and interdependence:  Managing the boundary that separates the organization from its external environment to reduce its impact on the organization.  Reducing the level of uncertainty and dependency on the environment by increasing the organization control over the external environment.  Integrating the organization with its external environment to create a “boundaryless” organization.

Copyright © 2002 by South-Western 4–8 Environmental Conditions Stable/Homogeneous Low Uncertainty Stable/Heterogeneous Moderate Uncertainty Shifting/Heterogeneous High Uncertainty Shifting/Homogeneous Moderate Uncertainty Low High Degree of Environmental Segmentation Degree of Environmental Change FIGURE 4–2 Source: J. D. Thompson Organization in action. New York: McGraw-Hill, 72. Boundary spanners, specialized roles Rules, regulations, SOPs

Copyright © 2002 by South-Western 4–9 The Organization-Environmental Relationship Causes of Differentiation in Design and Management PracticeCauses of Differentiation in Design and Management Practice External Task Environment Organization Design and Management Practice FIGURE 4–3

Copyright © 2002 by South-Western 4–10 Burns and Stalker A study of the relationships—A study of the relationships—  environmental conditions, management practice, and organizational design between organizations and their environments. between organizations and their environments. Identified two types of organizations:Identified two types of organizations:  Organic organization  An organization whose structure is fluid and flexible.  Mechanistic organization  An organization whose structure is fixed and rigid (also referred to as a bureaucracy).

Copyright © 2002 by South-Western 4–11 Mechanistic and Organic Organizations TABLE 4–1 Source: T. Burns and G. Stalker The management of innovation. London: Tavistock.

Copyright © 2002 by South-Western 4–12 Closed and Open Organizational Systems Closed systemClosed system  An organization that is “shut off” to its external environment and one in which managers look internally for ideas on productivity and efficiency improvements. Open systemOpen system  An organization that attempts to integrate itself with its external environment and looks to the outside for ideas on productivity and efficiency improvements.

Copyright © 2002 by South-Western 4–13 Closed Systems of Management FIGURE 4–4 Note: The arrows represent forces in the environment that attempt to penetrate the system. Closed System Institutional Level Administrative Level Technical Core

Copyright © 2002 by South-Western 4–14 Open Systems of Management FIGURE 4–4 Note: The arrows represent forces in the environment that attempt to penetrate the system. Open System Institutional Level Administrative Level Technical Core Environmental Information, Ideas, Beliefs,...

Copyright © 2002 by South-Western 4–15 The Influence of Environmental Uncertainty Moderate High Uncertainty Moderate Low Uncertainty Control-Oriented Management, Mechanistic and Closed Organizations Homogeneous StableShifting Heterogeneous Involvement-Oriented Management, Organic and Open Organizations FIGURE 4–5

Copyright © 2002 by South-Western 4–16 Linking Environments and Organizations The boundary-spanning processThe boundary-spanning process  The means by which managers link the organization with its external environment.  Boundary roles —those positions in organizations that link the organization with its external environment.  Boundary spanners —individuals whose job it is to span the organization’s boundaries and integrate the organization with the external environment.

Copyright © 2002 by South-Western 4–17 The Internal Environment StructuresStructures  How are the jobs/work that employees do designed?  What is the structural arrangement of the organization?  What types of technology are used to produce products and/or services? ProcessesProcesses  How is coordination of organizational components maintained?  How is decision making conducted in the organization?  How is information (communications) disseminated in the organization?

Copyright © 2002 by South-Western 4–18 People and their Beliefs Organization’s social systemOrganization’s social system  Includes organizational members—management, formal leaders, and nonmanagerial employees and the beliefs and values they share. Organizational culture Organizational culture  A pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with problems of external adaptation and internal integration.  Culture is stable and resistant to change once it is established.  Cultures have a strong effect on the performance of organizations.

Copyright © 2002 by South-Western 4–19 Managerial and Organizational Functions Organizational climateOrganizational climate  The prevailing organizational condition that reflects the overall organizational tone or character.  A company’s “personality” that is a function of both its environment and its reactions to the external environment.

Copyright © 2002 by South-Western 4–20 The Internal Environment and Organizational Climate Job Design Work Unit and Organization Design Technology Structure Coordinating Decision Making Communicating Processes Climate Management and Formal Leaders Nonmanagerial Employees Culture People and Their Beliefs FIGURE 4–7